USDJPY is probing below support at 82.01, the 38.2% Fibonacci retracement of the rally from the mid-March spike low set in the wake of the Tohoku earthquake. A break lower exposes the 50% Fib at 80.93. My long-term bias favors USDJPY gains as US bond yields - a long-standing driver of the currency pair - begin to press higher as the Federal Reserve ends QE2 in June while worries about the fiscal deficit in the wake of the S&P outlook downgrade put upward pressure on funding costs. As such, I see current weakness as a welcome buying opportunity and will continue to monitor prices for a long entry signal over the coming days.
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