Forex: USD/JPY rallies on US consumer sentiment

FXstreet.com (Barcelona) - The release of the Consumer Sentiment Index by Reuters/Michigan is having a particular effect on the USDJPY chart as risk aversion with a surprising jump to 83.1 of the preliminary figure, instead of softening from 78.3 to 78.0 as expected by market analysts.

Ahead of the New York opening, the USDJPY tested the daily lows printed in the Asian session, at 78.32. The market traded sideways for a while while waiting for the US data, and then the surprised market rallied to 78.46 session high, retracing daily losses.

Boj's Miyao is concerned of the potential risks of imbalances in Asia due to excessive short term stimulus coming from there. BoJ's Nishimura applauds the Eurozone banking union plans and its importance to avoid adverse feedbank loop in the economy and financial system.

Moody's is concerned with Japan's debt outlook caused by the political stalement. The rating agency believes government debt purchases by the BoJ are "not the ultimate solution to low economic growth", wrote UBS analyst Gareth Berry.

The pair is looking for support at the daily lows. "USDJPY has seen a sharp rally and while this is impressive the market has yet to close above its cloud resistance, today at 78.74/79.00", wrote Commerzbank analyst Karen Jones, pointing to supports at 77.45 and 77.15.