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Short-Term Forex Technical Outlook: USD/JPY (Update)
Wednesday, 26 November 2008 10:41:21 GMT  |  David Song, Currency Analyst
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As risk trends continue to drive price action in the currency market, a bullish outlook for the Japanese yen remains favorable.

Currency Pair: USD/JPY
Chart: 60 Min Charts
Short-Term Bias: Bearish

Analysis Update

USDJPY2_11-26

Over the last few hours of trading, the USDJPY slipped to a low of 94.72, but pulled back to hold above 95.00. The downward trend in the pair continues to favor a bearish outlook for the dollar-yen, and we may see the pair break below 94.60-70 (61.8% Fib level) over the remainder of the trading session. However, as the U.S holiday approaches, we may see increased volatility throughout the financial markets as liquidity dries up, but I expect the pair to work its way back towards the October lows over the near-term, and may test the 92.90-93.00 level over the following week as investors continue to curb their appetite for risk. Meanwhile, the fundamental event risks scheduled for the next 24 hours may call for a change in our outlook.

Analysis

USDJPY1_11-26

Risk trends remain a dominant theme in the currency market, and continues to favor a bullish outlook for the Japanese yen. After reaching a low of 90.90 on 10/24, the USDJPY surged to a high of 100.58 on 11/4, but has pared gains over the past two weeks to hold within a broad range. The dollar-yen made a few attempts to push higher, but the lack of momentum suggests that investors remain bearish against the pair. At the beginning of the week, the pair surged higher to cross above 96.90-97.00 (38.2% Fib level), but retraced those gains to break back below the 120 SMA. Over the remainder of the session, we may see the pair to work its way down towards 94.60-70 (61.8% Fib level), and a break below this level could send the pair back towards the October lows over the near-term. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.

To contact the author of this article, please email: dsong@fxcm.com

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