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USD/JPY – Will 104.00 Support Hold?
The correction in USD/JPY has been swift and brutal. As soon as the market realized that the proposed stimulus package may be a lot smaller than originally reported, the sold the pair with no mercy taking it down by two big figures before finally pausing at the 104.00 level.
Having now established support at the 104.00 figure the pair could head the other way if the FOMC meeting provide tailwind for the buck. Although no one anticipates any rate hikes just yet, the market will be keen to see any change in the language of the communique that could hint at a possible rate hike in September. The US data has been surprisingly resilient and that could lead the Fed to upgrade its assessment of the economy.
For now the 104.00 level is the key hold for the pair while the recent swing highs of 107.50 remain key resistance. A positive Fed release could send the pair towards a retest of those highs.