Those who sell USDJPY are optimistic about the prospects of the US Dollar. Technical analysts say the currency pair may still rally until the price breaks below 79,10.
Even if there is a rally, it won’t be strong and simple. Japanese exporters sell the US Dollar during times when the Japanese Yen is strong, thus exerting extra pressure on USDJPY. Moreover, there will be no major US news releases to support the US Dollar.
According to UBS experts, traders should pay attention to the difference between US and Japanese bond yields. Any structural changes in the difference will support the currency pair, thus giving way to 85.00. However, in order to change the yields a substantial stream of positive news is needed. Therefore, the experts say that the major short-term market drivers will be the deflation risks in Japan. Therefore, USDJPY is unlikely to rally. The experts expect the exchange rate to go down to 78.00 within 3 months.
According to , the Japanese Yen keeps strengthening against the US Dollar. The experts report that USDJPY is still forming wave an upswing represented by wave А/В of level Daily. Sub-wave А(С)/С or 3 is completed. The price is forming sub-wave 4 or B(C ).
A further downswing (a break below the local low is needed) will probably meet support around 79.08/02, 78.90/87. The current bearish move will be completed as soon as the price consolidates above 79.95. (as shown below).
