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7 Oct 2013
USD/JPY breaks 97.00 support as US Budget Impasse Festers
FXstreet.com (Athens) – The USD/JPY is trading significantly lower since the kick off of the Asian trading session on Sunday, amidst lingering US budget impasse.
USD/JPY broke 97.00 amidst US fiscal dead end; will the cross violate the 200 daily MA at 96.69?
The USD/JPY is trading heavily lower from the very beginning of the Asian trading session on Sunday, both on the US fiscal jitters as well as on the sharp fall of the Nikkei index. As widely known, the correlation between the Japanese currency and the Nikkei index is heavily inversely correlated and being more precisely, investors should bear in mind that the correlation between the Nikkei index and the JPY on the past 20days studies lies approximately at (-0.65%). Elaborating on, the yen gained solid ground today after the sharp fall in the Nikkei index (-0.9%) which is a major decline if we take into consideration that last week the Nikkei index noted a hefty 5% loss on a weekly basis. As long as risk-aversion hits the “on button”, as long as the debt ceiling approaches after another week end of sabre rattling between the Democrats and Republicans over spending, the Japanese currency will probably continue to outperform across the board. Last but not least, the uncertainty surrounding the US debt ceiling is not just dragging downwards the cross because the Yen is attracting investors seeking a safe haven; it also pushes further the American dollar as a lack of resolution to the debt ceiling problem justifies immensely Fed’s refusal to taper at the last FOMC meeting and push any chance of tapering well into 2014.
Technical Outlook on USD/JPY
Karen Jones, Head Technical Analyst at Commerzbank suggests that the “USD/JPY remains under pressure and is on course for the 200 day ma at 96.69, the August low at 95.80 and the 95.61 5 month support line. This is expected to hold the downside on the initial test(although we are less convinced that this will hold and provoke reversal).”
USD/JPY broke 97.00 amidst US fiscal dead end; will the cross violate the 200 daily MA at 96.69?
The USD/JPY is trading heavily lower from the very beginning of the Asian trading session on Sunday, both on the US fiscal jitters as well as on the sharp fall of the Nikkei index. As widely known, the correlation between the Japanese currency and the Nikkei index is heavily inversely correlated and being more precisely, investors should bear in mind that the correlation between the Nikkei index and the JPY on the past 20days studies lies approximately at (-0.65%). Elaborating on, the yen gained solid ground today after the sharp fall in the Nikkei index (-0.9%) which is a major decline if we take into consideration that last week the Nikkei index noted a hefty 5% loss on a weekly basis. As long as risk-aversion hits the “on button”, as long as the debt ceiling approaches after another week end of sabre rattling between the Democrats and Republicans over spending, the Japanese currency will probably continue to outperform across the board. Last but not least, the uncertainty surrounding the US debt ceiling is not just dragging downwards the cross because the Yen is attracting investors seeking a safe haven; it also pushes further the American dollar as a lack of resolution to the debt ceiling problem justifies immensely Fed’s refusal to taper at the last FOMC meeting and push any chance of tapering well into 2014.
Technical Outlook on USD/JPY
Karen Jones, Head Technical Analyst at Commerzbank suggests that the “USD/JPY remains under pressure and is on course for the 200 day ma at 96.69, the August low at 95.80 and the 95.61 5 month support line. This is expected to hold the downside on the initial test(although we are less convinced that this will hold and provoke reversal).”