USD/JPY: Yen weakened sharply on the currency market _12/07/2016

Trading recommendations

Buy in the market. Stop Loss 102.90. Take-Profit 104.00, 104.40, 105.60, 106.50, 107.60

Sell ​​Stop 102.70. Stop Loss 103.20. Take-Profit 101.90, 101.30, 101.00, 100.50, 100.00


Technical analysis

The growth is accompanied by a pair of positive data on the US labor market in June, published in Friday, and promises the Japanese Prime Minister Abe to take tough measures to expand the deflationary trend in the Japanese economy and to stop the strengthening of the yen.

Despite the fact that the pair is in a descending channel on the daily and weekly charts, technical indicators are deployed on long positions.

After the price at the end of last week lows reached in 2013-2014 near the mark of 100.60, with the opening of the current trading week the rise, and USD / JPY pair has added 300 points.

The price reached the resistance level 103.60 (EMA144 on 4-hour chart). In case of continuation of a couple expecting the next resistance levels of growth: 104.40 (EMA200 on 4-hour chart, 105.60 (EMA50 and the upper limit of the downward channel on the daily chart), 106.50 (Fibonacci 23.6% correction level to reduce vapors in June 2015 with a mark 125.65) 107.60 (EMA200 on the weekly chart).

Height above the level of 110.10 (EMA144 on the daily and weekly charts, Fibonacci level of 38.2%) could create conditions for the further growth of the pair USD / JPY. However, fundamental factors that show is the propensity of investors to buy safe haven against the background of continuing instability in the global financial markets, will not appear to significantly strengthen the pair USD / JPY. Even if the pair will rise in the short term, in the future it may be waiting for a return to the downward trend.

You must take this into account when you open long positions on the pair USD / JPY.

Further dynamics of the pair will be connected both to the actions and comments of the monetary authorities in Japan and the US, as well as the level of addiction investors to buy riskier assets and optimism on global markets.

Support levels: 102.80, 102.00, 101.50, 101.00, 100.60, 100.00

Resistance Levels: 103.60, 104.40, 105.60, 106.50, 107.60


Overview and Dynamics

The Japanese stock index Nikkei Stock Average on the basis of trading in Asia rose today by 2.5%, as investors close their short positions on the yen on expectations of growth "decisive stimulus" by the Bank of Japan.

As a result of Monday's USD / JPY pair added 218 points, or 2.1% due to a strong report on the US labor market released on Friday. Japanese index Nikkei Stock Average finished trading growth of 4%, showing a better day trend since March. In general, Asian and European stock markets rose on Monday after the ruling coalition of Prime Minister Shinzo Abe has won the election additional seats in the upper house of parliament. Thus, Abe will be easier to get approval this autumn expansion pack stimulating fiscal policies.

After Shinzo Abe on Tuesday said that the government "will add speed" in the way in which the economy will emerge from more than a decade of deflation, the yen continued to decline in value. Abe has promised to expand the cycle of falling prices easing monetary policy, a flexible fiscal policy and the implementation of structural reforms.

The government of Prime Minister Shinzo Abe plans to announce on Wednesday lowered the forecast regarding adjusted for inflation, the growth of Japan's GDP for the current fiscal year ending in March 2017, from 1.7% to 0.9%. And inflation expectations of Japanese consumers in the course of the Bank of Japan survey were the weakest since December 2012.

If Abe many promises about taking "decisive action" will actually be translated into reality, the yen may weaken significantly in the currency market, and the USD / JPY pair to grow up in a short time.