USD/JPY rebounds off major 100.00 support after central bank decisions
James Chen, CMT September 22, 2016 5:33 PM
After the Bank of Japan announced on Wednesday a new set of measures to extend quantitative easing and expand its monetary base, the Japanese yen initially fell back, as might have been expected. Shortly after, however, the yen surged ahead of the September Fed meeting on Wednesday afternoon, pressuring USD/JPY down towards the key 100.00 level. After the Fed provided somewhat of a mixed message as it kept rates unchanged yet again, the US dollar fell further into Thursday, but the yen’s subsequent retreat helped prompt a clean bounce for USD/JPY right around the noted 100.00 psychological level.
As USD/JPY currently continues to be entrenched within a long-term, medium-term, as well as a short-term bearish trend, the 100.00 level remains a major “line-in-the-sand” for the currency pair. For this key line at 100.00 to continue holding, the yen will likely need to weaken further on the basis of the newly-announced Bank of Japan easing measures, and the US dollar will likely need to rebound on the somewhat greater likelihood of a Fed rate hike by the end of the year.
If these conditions occur, USD/JPY could continue its bounce off 100.00 support to target a further recovery towards the 103.00 and then 105.50 resistance targets. Any subsequent breakdown below 100.00 support, however, would be a strong bearish signal, in which case the next major downside target is around the key 97.00 support level.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.