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17 Jul 2013
USD/JPY scenarios ahead of Bernanke
FXstreet.com (Barcelona) - Deducing the next directional move in the USD/JPY is a tricky one, amid big players on the western hemisphere going on 'summer holidays' - more choppiness - while more short term, the Bernanke testimony keeps the pair vulnerable to his tone.
As announced earlier today, traders will have to gear up with positions ready to enter the market at 12.30 GMT, as that would be the first chance they have to scan through the prepared text publication ahead of the 14 GMT presentation, with its subsequent round of Q&A.
Since the U.S. Dollar continues to be the worst performing currency this week, it seems safe to assume that the perception of the market towards a QE reduction in September has been severely damaged by last week's dovish remarks by Bernanke. U.S. Dollar bulls will be hoping that Bernanke restores confidence on a 'Septaper', however, judging by the latest developments, ">chances are not that great, which suggests USD/JPY may be ultimately exposed to further downside. If that was the case, one may still see as valid the recently shared views from Niall O'Connor, Currency Strategist at JP Morgan Securities, who said "the start window for another recovery leg of the JPY is currently wide open."
In the event of hawkish remarks by Bernanke later today, the topside in USD/JPY will be exposed, which at present moment shows immediate resistant mean at 99.65 - last EU/US session overlap high - ahead of 100.00 round number and 100.40/50 offers - weekly spike high -. On the flip side, in case Bernanke strikes the market with additional dovish remarks, which would add to last week's, the USD/JPY may slide aggressively, with levels of support identified at 98.85 - weekly low - down to 98.30 - July 10 low - ahead of deeper 97.50/30 - sequence of lows June 20-26 range-.
As announced earlier today, traders will have to gear up with positions ready to enter the market at 12.30 GMT, as that would be the first chance they have to scan through the prepared text publication ahead of the 14 GMT presentation, with its subsequent round of Q&A.
Since the U.S. Dollar continues to be the worst performing currency this week, it seems safe to assume that the perception of the market towards a QE reduction in September has been severely damaged by last week's dovish remarks by Bernanke. U.S. Dollar bulls will be hoping that Bernanke restores confidence on a 'Septaper', however, judging by the latest developments, ">chances are not that great, which suggests USD/JPY may be ultimately exposed to further downside. If that was the case, one may still see as valid the recently shared views from Niall O'Connor, Currency Strategist at JP Morgan Securities, who said "the start window for another recovery leg of the JPY is currently wide open."
In the event of hawkish remarks by Bernanke later today, the topside in USD/JPY will be exposed, which at present moment shows immediate resistant mean at 99.65 - last EU/US session overlap high - ahead of 100.00 round number and 100.40/50 offers - weekly spike high -. On the flip side, in case Bernanke strikes the market with additional dovish remarks, which would add to last week's, the USD/JPY may slide aggressively, with levels of support identified at 98.85 - weekly low - down to 98.30 - July 10 low - ahead of deeper 97.50/30 - sequence of lows June 20-26 range-.