Forex News: USD/JPY eases ahead of BoJ minutes

on Feb 20, 2014
Updated: Oct 21, 2019

**, Thursday 20 February:**

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Japanese equities fell today for a second session in a row after a disappointing Chinese manufacturing survey hurt overall market sentiment. The Nikkei opened with a gap down at 14,701.14 from Wednesday’s close of 14,766.54, with the slide extending below the psychological level of 14,500 and the 200-day Moving Average, which is currently in the vicinity of 14,506.22. The blue-chip index closed Tokyo trading at 14,449.18, down 2.15 percent for the day.

The USD/JPY also headed south over the course of the day’s Asian session, in apparent sympathy with the Nikkei. The currency pair reached a 3-day low of 101.66 just after the European morning bell. However, the greenback has strengthened against the yen since then with the bulls invigorated by a short-term line of support (see chart below). A break out of this week’s triangular range could propel a more pronounced move in the direction of the breakout. The Relative Strength Index on the 4-hour chart has been in a gradual uptrend since 24 January, but the bulls should trade with caution as the momentum gauge is currently precariously close to its line of support. To the upside, the near convergence of the 50-day Simple Moving Average and the 23.6 percent retracement of the decline from 105.44 at 103.32 should provide resistance for the pair.

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In the view of analysts at SEB Group: “Tuesday’s false break above 102.71 continues to weigh on the market and given that there’s a relatively strong tendency for a market to try the opposite side of a range after a false break we feel confident with our bear call. Continued weakness beyond 101.84, 101.55 and 101.38 will further enhance the bearish view.”

The Bank of Japan is scheduled to release the minutes of the policy board’s January Monetary Policy Meeting, at 23.50 UTC. The choice of words in the detailed record will be carefully monitored by market participants eager to gain insights into the yen’s short and medium term future.
Right now, the USD/JPY is trading at around 102.22, down 0.1 percent intraday.


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