USD/JPY: New 2013 Highs Once Again

Weekly Chart
USD/JPY Weekly" title="USD/JPY Weekly" height="613" width="979">
BOJ should send a Christmas card to Bernanke and the Fed signed by both Kuroda and Abe in order to express their gratitude. If they haven't done so, a "Happy New Year" card is definitely in order as the Fed's tapering has strengthened USD to such an extent that USD/JPY has managed to break the previous 2013 high and is currently on its way to reach 105.0. Before the Fed did this, there were serious doubts whether USD/JPY will be able to break the 103.75 mark as the latest round of stimulus announcement has been mostly disappointing, with market starting to lose faith in BOJ which threatens to pull Yen higher and USD/JPY lower. Without Bernanke's timely rescue, it is highly possible that USD/JPY would have pushed lower and bring us closer to 100.0 instead of where we are currently.

That being said, market is still expecting BOJ to introduce additional stimulus in 2014. If that does not materialize, it is possible that USD's strength will be able to stem the slide. Hence, even though a bullish breakout is ongoing right now, do not automatically assume that a continued bullish push from here is a done deal.

Hourly Chart
USD/JPY Hourly" title="USD/JPY Hourly" height="613" width="979">
Nonetheless, S/T direction is definitely on the upside, with prices currently pushing above the rising trendline that was in play the day just before FOMC decision. Currently we are trading above the highs post FOMC, suggesting that this bullish push may have some more legs to run. Stochastic readings are Overbought, but there is still some more space to push higher based on previous Stoch tops in the past week. Also, there is no evidence that bullish momentum is over, and we could even see slight bullish acceleration if the soft resistance of 108.4 is broken.

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