USD/JPY Underperforms in Reaction to Japan Airlines News

By Fast Brokers – The Dollar is continuing its strong performance against the Yen as investors speculate that Japan Airlines will need to file for bankruptcy.  This piece of negative corporate news is fueling the Yen’s weakness as investors expect more tough times ahead for Japan’s economy.  Furthermore, the Yen has already been placed at a disadvantage by the BoJ’s recent promise to fight deflation, indicating a loose monetary policy for the foreseeable future.  That being said, the USD/JPY may refrain from tackling too many topside barriers due to light activity in the wake of a holiday-shortened week.  Investors that are in the game today are currently reacting to a stronger than expected Chicago PMI figure.  Another positive U.S. data release could help the USD/JPY tack onto intraday gains as the session progresses and investors digest the negative news concerning Japan Airlines.  Meanwhile, the data wire will continue to quiet down with weekly U.S. Unemployment Claims on deck as usual.  However, China will slip in some Manufacturing PMI data on January 1st, and any surprising developments could have an impact on the Yen as investors return to action next week.

Technically speaking, the USD/JPY has overcome more key technical levels, including our previous 2nd and 3rd tier downtrend lines along with October highs.  The currency pair is presently battling September highs.  The USD/JPY’s eclipse of our downtrend lines is sending a message that the currency pair could be in for further gains over the medium-term towards the highly psychological 100 area. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with 12/29, 12/24, and 12/21 lows.  Furthermore, the highly psychological 90 level could serve as a strong support area should it be tested.

Present Price: 92.49

Resistances: 92.61, 92.80, 93.04, 93.30, 93.59, 93.85

Supports: 92.23, 92.01, 91.78, 91.60, 91.36, 91.13

Psychological: 90, September Highs

Market Commentary provided by Fast Brokers.

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