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USDJPY Probes Former Resistance- Downside Break to Expose 101.00

USDJPY Probes Former Resistance- Downside Break to Expose 101.00

David Song, Strategist

Talking Points:

- USDOLLAR Gap Remains in Focus; Carving Lower High?

- USDJPY Coming Up Against Former Resistance; 101.00 in View





Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index







Forex_USDJPY_Probes_Former_Resistance-_Downside_Break_to_Expose_101.00_body_Picture_3.png, USDJPY Probes Former Resistance- Downside Break to Expose 101.00

Chart - Created Using FXCM Marketscope 2.0

  • Failure to Push Above 10,590 (50.0 retracement) Risks Lower High
  • Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
  • Interim Support: 10,470 Pivot





MBA Mortgage Applications (MAR 7)




The lack of momentum to push back above 10,590 (50.0 percent Fibonacci retracement) may present further declines in the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) as it appears to be carving a lower high in March.

Despite the topside break in the Relative Strength Index (RSI), the slew of failed attempts to close above 10,590 fosters a bearish outlook for the greenback, and the reserve currency may face fresh monthly lows ahead of the Federal Open Market Committee (FOMC) meeting on March 19 as the oscillator turns over ahead of the 50 mark.

In turn, we will retain our approach to ‘sell bounces’ in the greenback, and the dollar may continue to give back the advance from back in October should we see a growing number of Fed officials scale back their willingness to move away from the zero-interest rate policy (ZIRP).

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Forex_USDJPY_Probes_Former_Resistance-_Downside_Break_to_Expose_101.00_body_ScreenShot200.png, USDJPY Probes Former Resistance- Downside Break to Expose 101.00


Forex_USDJPY_Probes_Former_Resistance-_Downside_Break_to_Expose_101.00_body_Picture_1.png, USDJPY Probes Former Resistance- Downside Break to Expose 101.00
  • Need a Break Below Former Resistance to See Another Run at 101.00 Handle
  • Interim Resistance: 103.30 (23.6 retracement) to 103.50 (100.0 expansion)
  • Interim Support: 100.50 (61.8 expansion) to 100.70 (61.8 expansion)

The greenback weakened against two of the four components, led by a 0.35 percent rally in the Japanese Yen, and a move back below former resistance (102.50-60) could spark another move down towards the 101.00 handle as the pair carves a lower high around 103.30-50.

With that said, we may see a further shift in the Bank of Japan (BoJ) policy outlook as the central bank retains an upbeat tone for the economy, and the USDJPY may continue to face limited topside advances over the near-term as Governor Haruhiko Kuroda scales back his willingness to further expand the asset-purchase program.

At the same time, the ongoing shift in market sentiment may continue to benefit the Japanese Yen as traders curb their appetite for risk, and we may see the USDJPY ultimately threaten the bullish trend carried over from 2013 as the BoJ looks to move away from its easing cycle.

--- Written by David Song, Currency Analyst

To contact David, e-mail Follow me on Twitter at @DavidJSong.

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