Forex: USD/JPY currently at 38.2 percent Fibonacci level

on Sep 16, 2013

**, Monday 16 September:**

The US dollar opened half a percent lower in today’s Asian session, compromised by the decision of Lawrence Summers to withdraw his candidacy for appointment as US Fed chairman. Summers was one of the favourites for the hot-seat in US monetary policy but in a letter to President Obama the Harvard economics professor concluded that his potential appointment ‘’would not serve the interests of the nation’s ongoing economic recovery.” Larry Summers was perceived as the more hawkish option for Fed chairman as compared with the other leading contender and current deputy chair Janet Yellen.

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With the greenback losing its footing on the news, 10-year US Treasury bond yields are also currently down 2.76 percent to 2.81.
The USD/JPY opened at 98.61, 75 pips lower than Friday’s close, and so far today has not closed the gap. The currency pair is holding around the 38.2 percent Fibonacci level of the rally from 95.8 to 100.6 at 98.76. Trading in the pair is active notwithstanding the bank holiday today in Japan (Respect for the Aged Day) and a closed Tokyo Stock Exchange.

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If the yen continues to strengthen against the US dollar, the first support would be 98.4, which is the 200-period Simple Moving Average on the 4-hour chart. Further downside pressure may be limited around the rising trend line projected from the bottom on 8 August. For the bulls to reaffirm their stance, the pair needs to close today’s gap shortly and starting trading above 99.5.
Right now, the USD/JPY is changing hands around 98.83, down 0.55 percent intraday.
Resistances today: 99.09, 99.5 and 99.97.
Supports today: 98.4, 98.1 and 97.83.


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