The USD/JPY for Week of June 9, 2013
USD/JPY Weekly Close: 97.51
Weekly High/Lows for:
USD/JPY Weekly Pivots: S3: 89.03; S2: 92.01; S1: 94.76; P: 97.74; R1: 100.49; R2:103.47; R3: 106.22
USD/JPY and JPY PAIRS: USD/JPY and JPY pairs continued to trade lower last week but gave up some of the losses towards the end of the week. Continued discussions over the timing of the Fed’s tapering of the asset purchase program continues to play out in the markets. Since the economic data releases were mixed this week, the markets had a bumpy volatile ride. Both the S&P and the DOW sold off heavily towards the beginning of the week and ended the week rebounding strongly with the Dow closing at 15,226 (hi 15308 lo 14846) and the S&P closing at 1640.7 (hi 1647.7 lo 1597.7). The 10-year Treasury yield also began the week selling off but rebounded strongly at the close of the week on Friday. With the selloff in equities, bond yields and JPY pairs at the beginning of the week, and strong rebounds across the board at the end of the week, it appears that the markets are trading in sync with one another. Watch the calendar this week with news releases, for market players will certainly be hunting for analysts best forecasts about the Fed’s tapering. For Forex traders, watch the equities and yields for direction in the JPY pairs.
Moving to the technicals, all 6 JPY pairs have traded to the technical target zone defined last week – the 4th wave of a lesser degree targets. The big movers of the week were the commodity pairs, the AUD/JPY, CAD/JPY and NZD/JPY. The C-leg of the zigzag patterns took those crosses down to their targets. This week, we ran the Fibonacci retracement tool on the entire move down on these pairs, making the assumption that we will now correct the strong impulsive moves down. Expect 38.2% to 50% retracements on these pairs for the coming week. (and 23.6% for the commodity pairs if that). It is too early to tell at this juncture if the move down is complete and that we will resume the uptrend, or if this move up will prove corrective and will be followed by another move down. The benchmark pair to watch is the USD/JPY as all the JPY pairs will follow its lead.