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CURRENCY ANALYSIS

Majors report USD/JPY

The pair Dollar/yen has been moving in a “secular” down-trend for several decades: at the beginning of the seventies it was trading at around 350, since the mid-eighties it moved constantly below 175, reaching a historical low at 79.75 in April 1995. After a strong bounce reaching a top at 147.65 in August 1998, the major down trend resumed, with a series of falling highs and lows, culminated in a new historical low at 75.38 on October 31st 2011. 
 
After an accumulation phase, since the end of 2012 a strong rally brought the pair around 105.50 (high 105.44 on January 2nd 2014). Since the beginning of 2014 a correction phase – along with Nikkey’s strong decline – has brought the pair towards the psychological support around 100. 
 
The ultra-expansionary monetary policy adopted by the Abe administration has produced a strong and generalized depreciation of the yen of such a magnitude never seen in the previous 15 years (-27% vs Usd since October 2012 to January 2014’s high).
 
In the last months the pair has been moving sideways, above the support area 100.00/80 and below 104.20. A first positive impulse would be triggered above 104.20, but a clear signal of an uptrend recovery requires the overcome of January’s peaks in 105.00/50 area (premature right now), targeting in the coming months the strong resistance at 110.00. A break below 100.00/80 would instead provide a weakness signal, with a first target at 99.00 and afterwards the strong support in 95.80-96.50 area, that is supposed to hold (likely) to preserve a bullish outlook. 

 

currency analysis USD JPY

 

TREND

SUPPORTS

SPOT PRICE

RESISTANCES

Trend 3-6 months

side

S1

100,00/80+

101.85

R3

108-109+

Trend 6-12 months

side

S2

99.00

R2

105,00/50++

Trend 12-18 months

up/side

S3

95.80-96.50

R1

104.20+

 

Maurizio Milano