The USD/JPY has seen rather a brisk trading the past few days as financial houses have reacted to nervousness within the broad markets and have created quick price velocity. The USD/JPY traded to a weekly high yesterday when it touched the 132.900 level momentarily. This move upwards yesterday may be interpreted by some traders as an overreaction to the lows the USD/JPY made early in the week. The USD/JPY touched the 130.400 ratios on Tuesday.
After hitting a low around the 129.675 mark on the 24th of March, the USD/JPY has produced a rather steady upwards climb. However, evidence of strong reversals since Monday of this week also suggests financial houses are not comfortable yet with the value being demonstrated in the USD/JPY. Today’s trading later today will likely provide more insights regarding behavioral sentiment and which direction financial houses are leaning towards based on near-term outlooks.
U.S Gross Domestic Product Results may move the USD/JPY Later Today
The U.S will release Gross Domestic Product statistics later today and the results will cause additional volatility in the USD/JPY. If the outcome of the U.S growth numbers comes in weaker than expected this could cause the USD/JPY to see some selling develop. If the results are stronger than anticipated, this could spark more buying of the USD/JPY, because the GDP growth data will have an impact it is believed on the future rhetoric of the U.S Federal Reserve monetary policy stance.
Corporate Banking Sector News may take a Back Seat Soon in Forex
If the crisis within the U.S. and European corporate banking sector can continue to produce calm, today’s U.S GDP numbers will become the focus of attention for financial houses. The steady move higher in the USD/JPY can be interpreted as an indication that financial houses thought the currency pair had been oversold in the short-term, and that additional economic data would be needed to demonstrate more reasons for the U.S central bank to become more dovish.
- The 132.100 ratios should be watched today, if it is broken lower and sustained this likely means the USD/JPY could see more selling.
- However, traders need to brace for volatility in the next few hours as financial houses position before the U.S GDP results.
- Solid risk management will be needed today because price velocity will become dynamic depending on the growth statistics.
USD/JPY Short-Term Outlook:
Current Resistance: 132.620
Current Support: 132.290
High Target: 132.820
Low Target: 131.790
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