USD/JPY pulls back after record rally
James Chen December 10, 2014 8:04 PM
<p>USD/JPY (daily chart shown below) has finally made a significant pullback after a record rally that pushed the currency pair up from a low of […]</p>
USD/JPY (daily chart shown below) has finally made a significant pullback after a record rally that pushed the currency pair up from a low of 105.18 in mid-October to a high of 121.83 earlier this week. This steep climb represented a rise of more than 15% in less than two months.
The noted high of 121.83 that was established this week marked a new seven-year high for USD/JPY, and fell just slightly short of its upside resistance target at 122.00 before retreating.
Aided by exceptional US dollar strength and corresponding yen weakness, USD/JPY has traded in a significantly steeper trend than other major currency pairs in the past several months.
The bullish trend accelerated at the end of October, when the currency pair spiked above major 110.00-area resistance. Upside momentum then followed through with a bullish run that broke above successively higher resistance levels, including 114.50, 118.00, and 120.00, without providing any substantial pullback until now.
While the overall trend bias for USD/JPY still remains bullish, with the recent over-extension of USD/JPY’s rise, a pullback had been overdue.
The current pullback has pushed the pair down to hit key support around the noted 118.00 level, as expected. Any additional correction could target further downside around the major 114.50 support area.
In the event of a resumption of the bullish trend after the current pullback, key upside resistance targets continue to reside around 122.00 and 124.00.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.