USD/JPY Stabilizes Above July Lows

The USD/JPY continues its stabilization pattern on declining volume post-July 8th. The USD/JPY found a little strength in the S&P's rally yesterday, though no substantial movements occurred. It seems the USD/JPY is attempting to form a new base amid a lack of trend identity across markets. However, the momentum remains to the downside considering we haven't seen any noteworthy action to the upside for some time. Hence, it appears the USD/JPY could be lodged at depressed levels for a while longer, only inflicting further damage on a Japanese economy struggling with a bombing export economy.

We still believe a retest of 90 will occur, it's just a matter of when. The key for the USD/JPY will be avoiding a retest of January lows, for a retracement beneath these levels could inflict considerable damage. The USD/JPY would likely need a large downturn in U.S. equities to test the bottom limits of its yearly trading range. Since the S&P futures have rallied back towards 900, a large breakdown in the USD/JPY is probably out of the question for the near-term. The near-term goal to the upside for the USD/JPY is getting back above our 1st tier downtrend and uptrend lines. Otherwise, the currency pair will continue to trade around uncomfortable levels.

The BOJ will conclude its meeting late Tuesday/early Wednesday and announce any updates/revision to its present monetary policy. While the BOJ has little to work with concerning its benchmark rate, investors will be curious to see if there are any additions/alterations to its QE plan. Furthermore, investors will pay close attention to the BOJ's economic sentiment and will look to see if the central bank provides any economic outlook.

Present Price: 92.85

Resistances: 93.28, 93.76, 94.45, 94.99, 95.73

Supports: 92.57, 91.96, 91.50, 91.03, 90.28

Psychological: 90, 95

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