USD recovers against yen. Having hit a 1 month low against the yen of 121.00 late yesterday the US dollar recovered some ground overnight to re-enter the 122.00 level as risk appetite returned after US equities rebounded. This was yen weakness in general.

The Bank of Japan kept its overnight call rate target unchanged at 0.5 percent for the sixth straight meeting, but a stray vote by a member of the nine-man board suggested a rate hike may be imminent.
The central bank said Atsushi Mizuno voted against the proposal by governor Toshihiko Fukui to leave the overnight call rate at the current level.
Many analysts had been expecting the BoJ to put interest rates on hold but were also anticipating a split vote, though not as narrow as eight to one. Some analysts are saying that could mean a lesser chance that rates would rise as early as next month although others believe strong data may sway the BoJ to lift rates in August.
The yen weakened slightly shortly after the decision was announced, slipping to around 122.40 yen against the US dollar from 122.19 yen earlier.

The following technical analysis gives us a detailed lookout on what is expected to happen to the pair.

The buying point of USD/JPY is at 121.88 or 122.00; based on a strong support which was previous resistance.

- Fibonacci retracement 38.2% is the first target taking profit at 122.39 and the next target will be Fibonacci 61.8% at 123.05
- Previous support will be the stop loss at 120.75

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages below the zero line, the shorter term moving average is faster than the long term and is pointing upwards with break of zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI, we can determine that the market is in a bullish direction.

The momentum oscillator is very important to understand the strength of the market and as we see on the graph; it break the zero line. The Stochastic oscillator breaks 20% line and moving upwards. Most of the indicators show us the strength of the USD against the Japanese Yen.

* The following analysis is for information only; Finotec is not responsible for any
decisions or misinterpretations based on the given text.

By Finotec’s professional analyst,
Tony B.

dealingdesk@finotec.com