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Forex pairs in this Article » USD/JPY (Barcelona) - Tim Riddell, Head of Global Markets Research, Asia at ANZ notes that USD/JPY has moved back into its pre-crisis range.

Key Quotes

“A structural base formed in 2011. The sharp rally into H1 2013 is therefore seen as an initial leg of a larger series of gains for USD/JPY. The current rally has taken USD/JPY above its pre-crisis range lows as well as 38.2% of the range of the past 20 years (103.00-25). This opens potential for further gains, through declining resistance (106’s), towards 111.50-112.00 (50% of past 20 years’ range) and potentially the highs of mid-2000’s (120-124).”

“Slippage below 101 could suggest a return to a broader consolidation – but not a reversal - before USD/JPY can develop a more constructive rally. Interim dips should now hold above 102.00 (concern below 101.00) to allow for a further push to test declining resistance (basis highs of 1998 and 2007) in the 106.50-75 area.”

“Any acceleration in current gains could trigger an early push to the 112 area. A close below 101.00 is needed to suggest an interim consolidation has to form. The possibility of a broader correction ought be addressed but is not seen as a major risk. The excesses of daily momentum are being addressed by recent pullbacks and the risk of a further bout of corrections needs to be addressed given the breach of trend-channel support after the test of 105.50-60.”

“Though the initial correction was sharp, it was contained within the context of the rally from 96.50. Given the strong rebound, further corrections (ideally towards 102.00) should allow for longs to be rebuilt. The danger is that the underlying uptrend is so strong that standard corrections fail to unfold. A burst above 105.50 could trigger an early test of long-term declining (red) resistance in the 106.50-75 area.”
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