USD JPY rises to critical resistance
As the Greek debt crisis made further progress towards a potential resolution and Asian equity markets, most notably China, showed signs of a tentative stabilization […]
As the Greek debt crisis made further progress towards a potential resolution and Asian equity markets, most notably China, showed signs of a tentative stabilization on Thursday, a relative decline in risk perception has prompted the Japanese yen safe haven currency to sustain its week-long retreat against the US dollar.
Compounding this retreat has been a persistently strengthening US dollar boosted both by reinforced expectations of a 2015 Fed rate hike as well as positive US economic reports in the past few days.
These factors have combined to lift the USD/JPY (daily chart shown below) currency pair from its seven-week low of 120.40 last week up to its current position around the critical 124.00 resistance level. Last week’s low was just above both the key 120.00 support level and the 200-day moving average.
Since USD/JPY fell from its 13-year high of 125.85 in June, it attempted to rebound back above this 124.00 resistance barrier on at least two occasions during that month, but repeatedly failed to close above it.
Now that the currency pair has risen once again to revisit and re-test this level, any sustained break and close above 124.00 could provide the impetus for a continuation of the recent run towards its original upside target of 126.00. In this event, USD/JPY will have confirmed a continuation of its multi-year bullish trend after the recent pullback.
A failure to climb above the 124.00 resistance barrier could prompt a pullback and continued consolidation below 124.00 and above the key 122.00 support level.