USD/JPY Breaks Out of Triangle Pattern, May 12 2013


USD/JPY Weekly Close: 101.63
Weekly High/Lows for:

USD/JPY 101.99/98.59
EUR/JPY 132.26/128.99
GBP/JPY 156.69/152.73
AUD/JPY 102.30/100.41
CAD/JPY 100.97/98.07

USD/JPY Pivots: S3: 96.08; S2: 97.33; S1: 99.48; P: 100.73; R1: 102.88; R2: 104.13; R3: 106.28

USD/JPY and JPY PAIRS: USD/JPY broke out of its triangle on Thursday after finally breaking through the psychological 100 level. CAD/JPY also broke firmly through 100 and moved up a healthy 2.96% from the weekly low to the weekly high. The USD/JPY moved the most during the week, at 3.45% from the weekly low price to high price. The CAD/JPY, GBP/JPY and EUR/JPY were next in order of move magnitude, with the AUD/JPY trailing with a 1.88% move, without even making a new high above the previous week’s high.

Last week’s improved US Initial Jobless Claims report was very significant, as it had analysts talking about stable US labor markets which could lead to the Federal Reserve unwinding QE3, or the end to quantitative easing in the US. This propelled the USD/JPY and JPY pairs to gain in value, in conjunction with US Treasury yields moving higher, and US equities making new highs. The US 10-year yield jumped to 1.9% from May’s low of 1.6%, and the 30-year Treasury yield followed suit, helping the US dollar climb against most currencies. This is the first time in a long time where we have seen a broad-based dollar move.

Moving to the technicals, the USD/JPY played out a very shallow E leg of the triangle chart pattern to 98.59 before trading higher and taking out the important 100 level. The market will continue to buy USD/JPY on dips until it reaches its next target of 105.60. Look to buy a correction of this last impulsive move at the following Fibonacci targets: 38.2% at 100.78; 50% at 100.36; and 61.8% at 99.94. On the accompanying EUR/JPY chart, the next target zone is 1.3450 – 1.3500. Market players will be buying the corrective dips.

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