USDJPY may be poised for a break higher

USDJPY has recovered all of this week’s opening losses. The pair gapped lower at the opening of trade for the week after a very bullish speech by BoJ Kuroda and concerns about the US debt ceiling. Now, however, USDJPY has soared to a key resistance zone around 98.60/70 on the back of a possible resolution to the debacle in the US.

Politicians appear to be getting closer to making an agreement, with Senate leaders closing in on a deal to raise the federal debt ceiling and end the government shutdown. The details of the proposed plan are limited but the crux of the deal is that the debt limit would be raised to mid-February and the federal agencies that are currently offline would be funded until mid-January.

As we previously stated, USDJPY is facing a wall of resistance around 98.60/70; consisting of the pair’s 100day SMA and 50% retracement level from last month’s high and a prior resistance zone. A bullish crossover in daily MACD suggests we may see a break here which could be the catalyst for a push towards another resistance zone around 99.10 – prior resistance and the pair’s 61.8% retracement level from last month’s high. In the event that the pair fails to break 98.60, then we may see it retest its 50day SMA, currently around 98.35, and/or a myriad of support zones between here and 98.55

Source: Forex.com

14.10.2013