USD/JPY: the decline continues _14/06/2016

Trading recommendations

Sell ​​in the market. Stop Loss 106.50. Take-Profit 105.65, 105.00, 104.50, 103.70

Buy Stop 106.60. Stop Loss 105.90. Take-Profit 108.00, 109.00, 109.50, 110.00, 110.20, 110.80, 112.00


Technical analysis

A strong negative impulse to the fundamental nature continues to put pressure on the pair USD / JPY.

Against the background of increasing uncertainty in the financial markets and the increased demand for safe-haven assets USD / JPY pair after the active correction is reduced again in May. The price has already reached the level of May and the annual lows near the mark of 105.50 and the pair continued decline.

Japanese Finance Minister Taro Aso today reiterated the commitment to the implementation of interventions in the foreign exchange market by the Bank of Japan.

In the case of the breakdown level of 105.50 reduction pair may develop to the level of support 104.50 (EMA200 monthly chart), 103.70 (EMA144).

Indicators OsMA and Stochastic on the 4-hour, daily, weekly, monthly charts recommend short positions.

Upon reaching the level 104.50, 103.70 is possible sharp rebound. Near these levels is also possible Bank of Japan intervention in the foreign exchange auction.

However, the rebound force in this case is difficult to predict. So far, the fundamental factor on the side of the bears.

In the case of the breakdown level of 103.70 pair will go further into the descending channel on the weekly chart to the level of 102.80, the channel's lower border.

In an alternative scenario in case of a rebound is possible to increase the levels of 108.00 (EMA200 on the weekly chart), 110.80 (EMA144 on the weekly chart and Fibonacci 23.6% correction level to reduce vapors from June 2015 with the level of 125.65).

In the case of consolidation above 110.80 levels are waiting for the further growth of the pair to levels of 112.00, 113.65 (38.2% Fibonacci level), 114.20 (EMA200 on the daily chart).

Support levels: 106.00, 105.50, 105.00, 104.50, 103.70

Resistance Levels: 108.00, 109.50, 110.00, 110.20, 110.80, 112.00, 113.00, 113.65, 114.00


Overview and Dynamics

More on the deputy governor of the Bank of Japan last week Nakaso said that the end of deflation in Japan through the "decisive" softening "absolutely necessary".

He was echoed by Finance Minister Taro Aso, who said that the Japanese authorities will prevent speculative growth of the yen, continuing, thus threatening direct intervention in the currency market. According to Aso, the recent strengthening of the yen was "swift and speculative" and, if necessary, the monetary authorities of Japan would like to take tough measures.

The closer a referendum in the UK with the question of the further stay of the country within the EU, the more increases the tension and uncertainty of the financial markets and the stronger demand for safe-haven assets.

Against this background, the Japanese yen reached a three-year high against the British pound and the euro, as well as the level of October 2014 in tandem with the US dollar. The results of the latest public opinion polls conducted in the UK say that half or more of respondents in favor of the UK exit from the EU. In the case of such an outcome of the referendum and the country's exit from the EU structure it is hard to imagine the volume of financial flows between the UK and Japan, or between the Eurozone and Japan.

However, Japan itself faces the problem of deflation and a slowdown in economic growth and further strengthening of the yen as a safe-haven country is absolutely unnecessary.

The meetings of the Federal Reserve, the Bank of Japan and Bank of England, which will be held this week, also enhance the atmosphere of uncertainty in the market. The probability of rate hikes in the United States is almost zero, but investors will analyze comments Chairman Janet Yellen for hints on the prospects of higher interest rates.

The inaction of the Fed and the strengthening of the yen increases the pressure on the Bank of Japan in the direction of further easing of monetary policy at a meeting of the bank, which will take place on Thursday.

The pair USD / JPY came close to May and the annual lows near the 105.50 mark, especially rapidly decreasing since February and the beginning of June.

From the news today forward data on retail sales and the export-import prices in the US in May. In the case of growth rates the US dollar strengthened on the foreign exchange market. However, the USD / JPY pair is that the predominant steady downward trend, and the pair is committed to the key support level of 104.50.