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Yen Technical View

Posted by Joseph Trevisani on May 20, 2014 10:57:00 AM

The Dollar/Yen lingers above the band of support between 101.20 (lows, 3/14-101.21, 3/17-101.24, 3/18-101.28) and 100.75, (lows 2/3-100.78, 2/4-100.76, 2/5-100.80). 

Since the break of trend support on Thursday at 101.65 (101.68--6/13/13, 101.63 2/4/14), the pair has been cornered below the February trend line, upward motion having halted there Friday, Monday and today and the 101.20 support. The 200 day moving average adds emphasis at 101.25.

The 10-year generic U.S. Treasury yield had lost 19 basis points from Tuesday (high 2.66%, close 2.61%) to Thursday (low 2.47%, close 2.49%) last week and that helped  the Dollar/Yen through the trend line support (101.65)  that had held since last June.  Yields have stabilized this week, rebounding as high as 2.55% today. Resistance is the 10-year yield is at 2.57%, the low from February 3rd until Thursday's collapse. The U.S. yield would have to break back into the 2.60%-2.80% range before it could provide additional upward pressure to the dollar in the currency markets.

The Dollar/Yen upside is currently more problematical, with resistance at the two aforementioned trend lines 101.65 and 101.80.

Japanese machine tool orders ( March 19.1%) and first quarter GDP (5.9% annualized) are not conducive to a further Bank of Japan assault on the Yen, even though both figures were likely influenced anticipatory spending in front of the pending rise in Japan's sales tax. A return to 102.00 and 102.25 would be needed for traders to reconsider the markets mild pro-dollar stance.

 

Technical Levels

102.50   Offers

102.36   May 14 high

102.31   55 day moving average

102.04   21 day moving average

102.00   Moderate offers

101.80   Good offers June 13 trend line resistance

101.65   Good offers February 4 trend line resistance

101.25    Market rate 1:00 pm Tuesday

101.25   200 day moving average

101.20   Moderate support

101.19   Intra-day low

101.00   Good support

101.80   Good support

100.75   2014 low, February 4th

100.70   Large stops

100.55   Support

100.50   Stops

100.05   Strong Support

100.00   Stops

yen 01

us 10

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Bloomberg

 



 

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