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Talking Points:
- USD/JPY Technical Strategy: Flat
- Support: 101.38 (Feb 17 low), 100.75 (Feb 4 low)
- Resistance:102.84 (23.6% Fib exp.), 104.14 (38.2% Fib exp.)
A decision to pass on a USD/JPY short trade setup yesterday has proven prudent as prices recoiled higher from support at 101.38, the February 17 low. Near-term resistance is at 102.84, the 23.6% Fibonacci expansion, with a break above that targeting the 38.2% level at 104.14. Alternatively, a reversal beneath support aims for the February 4 low at 100.75.
Prices are hovering near the middle of their recent range with little evidence to suggest a directional follow-through for either a long or a short position. Furthermore, the pair remains highly correlated with risk sentiment trends, meaning follow-through remain a questionable proposition as prices continue to be vulnerable to the still-evolving crisis in the Ukraine. We will continue to play it safe and stand aside.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com