usdjpy rises to test major resistance 1632252015
<p>USD/JPY rose on Wednesday to test major psychological resistance around the 120.00 level as volatility in the equity markets eased and the US dollar continued […]</p>
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USD/JPY rose on Wednesday to test major psychological resistance around the 120.00 level as volatility in the equity markets eased and the US dollar continued to maintain the traction it has gained in the past several days. The currency pair hit an intraday high slightly above the 120.00 handle before subsequently retreating below it.
USD/JPY’s current price level is also where its 50-day moving average is presently situated, and falls right around the extended bottom border of the large triangle pattern that was broken down a week ago. The currency pair is therefore trading around a major confluence of resistance.
Since breaking down below the noted triangle pattern a week ago and then extending its losses down to approach key 118.00-area support, USD/JPY has spent the past week in a sharp rebound as both the US dollar and stocks have regained some traction. USD/JPY generally carries somewhat of a positive correlation with equities, as high volatility in the stock markets tends to pressure the currency pair while low equity volatility tends to support it.
As global stock markets have lately been in consolidation mode with little in the way of major volatility, and the US dollar has regained some of its previously lost ground, USD/JPY has benefitted by rising back up towards 120.00.
Any return to higher market volatility, however, could quickly prompt another sharp drop for USD/JPY, extending the trend breakdown that was initiated in August, which was caused primarily by the global stock market sell-off during that month.
If USD/JPY is unable to make a sustained break above 120.00, the currency pair could likely fall back towards the 118.00 support level. On any breakdown below 118.00, the next major target further to the downside is around the 116.00 level, which was last approached during the noted August drop. In the event of a sustained breakout above 120.00, the 121.00-area resistance should pose a potential barrier to further gains.
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