USD/JPY spent the week in a tight 102.30/101.70 range. Market sentiment turned bearish following the more dovish than expected US Federal Reserve meeting on Wednesday. Expectations of the BOJ additional easing stay low – the economy shows resilience to the tax hike in April. This week Japan reported a lower-than-expected trade deficit in May. What’s more, unrest in Iraq raises demand for the safe haven JPY.
For now the market doesn’t give any clear trade signals. Break above the 102.30 resistance would open the way to 102.80, while a break below the 101.60 support – to 100.80.
USD/JPY keeps on forming a descending triangle – bearish formation - with a support at 100.80 (at the same time, this is a 55-week MA). Resistance of the formation lies at 102.80. However, the market remains pretty far from confirming it.
The only thing we need to keep in mind is that the BOJ is watching the yen exchange rate and is very unlikely to let the pair strengthen below the 100 mark.
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