The yen put in a strong performance during today’s Asian trading – driving USD/JPY below the 120 level and EUR/JPY under the 130 mark, as the Bank of Japan decided to keep its massive stimulus program unchanged. USD/JPY was at 119.85 and EUR/JPY was last quoted at 130.06.
Interestingly, yen strength was coupled with a strong performance by the Japanese Nikkei 225 stock index, which climbed to its highest in 15 years and was increasingly eyeing the psychological 20,000 mark. Usually the yen and the Nikkei are inversely related.
Chart analysis
USD/JPY opened on Wednesday at 120.23 and extended lower from the previous day’s high of 120.43. Immediate support is seen at the 38.2% Fibonacci retracement level of the upleg from 115.84 to 122.01.
The low of December 16, 2014 at 115.55 is a critical level and a break below this would weaken the underlying long term bullish trend that has been in place since 2012. Consequently, a double top chart pattern would be completed.
In the medium term, the trend has been neutral and the market has been trading in a range between 115.55 and capped at 122.01. For now, support has been provided by the daily Ichimoku cloud.