Wednesday September 29, 2010 - 13:34:30 GMT
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USD JPY Nearing Intervention Bottom at 82.88
The USD JPY lost ground during the Asian trading hours
Wednesday, driving the market closer to the â€śintervention bottomâ€ť at 82.88.
The primary force driving the U.S. Dollar lower was the Bank
of Japanâ€™s quarterly survey of business sentiment which showed a
better-than-expected improvement in a key index known as the Tankan survey.
The survey headline index improved to +8 in September from
+1 in June. Forecasts call for the index to drop to -1 in December. This is the
first outlook in seven quarters calling for sentiment to worsen three months
The results of the Tankan survey threaten the BoJâ€™s view
that the economy will return to a sustainable growth path and deflation will
end next year. The weak forecast is likely to increase the odds that the BoJ
monetary committee will ease credit further at either its meeting next week or
in late October.
In the meantime, the only option available to the BoJ ahead
of this meeting is another round of intervention. Itâ€™s been almost two weeks
since the last intervention and the market has taken back almost 80% of the
rally that day. Traders are looking for another intervention, but where and
when it will take place, is the question. The line in the sand is currently 82.88
This morning the USD JPY is holding support on an uptrending
Gann angle at 83.51. On the upside, resistance is at a downtrending Gann angle
at 83.93 and a .618 level at 84.04. As long as this pair remains under this
resistance cluster, then look for downside pressure.
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