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Talking Points:
- USD/JPY Technical Strategy: Flat
- Support: 115.37, 113.85, 112.77
- Resistance: 116.30, 117.82, 119.05
The US Dollar resumed its advance against the Japanese Yen, moving to the highest level in seven years. Near-term resistance is at 116.30, the 23.6% Fibonacci expansion, with a break above that on a daily closing basis exposing the 38.2% level at 117.82. Negative RSI divergence warns of ebbing upside momentum and hints a turn lower may be brewing. A reversal below the 14.6% Fib at 115.37 opens the door for a test of the November 10 low at 113.85.
While entering short appears compelling from a technical perspective, we will tactically opt to stand aside for now. USDJPY continues to show a formidable correlation to the SP 500 (0.88 on rolling 20-day studies) and we are leery of selling the pair considering the index has just hit another record high.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com