In late June the USDJPY moved through the key 107 level to a three week high before slowly easing back towards 107 where it is found some support. This level has now reversed roles providing stiff resistance to the USDJPY. Interestingly, the USDJPY has spent considerable time trading around the 107 level and has often seemed content to settle around it.
In early June the USDJPY moved sharply dropping from above the key 109 level and two month high down through the popular range and back below the key 107 level to a one month low, after having previously surged higher through 109. For several months, the 107 level supported the currency pair well pushing it back towards 108 and 109 repeatedly, before the recent drop lower. For the best part of three months, the USDJPY traded back and forth between 107 and 109 after having dropped sharply from a one month high around 111.50, and these levels are likely to continue to play a role should the USDJPY rally again.
Through the middle of March, the USDJPY surged higher to regain lots of lost ground moving up from lows near 101 back up to the 111.50 range. The most significant move of late is when the USDJPY fell from a 12 month high above 112 down to a three year low near 101 in short time. Up until the high above 112, the USDJPY was content to trade in a wide range right around the 109 level, not showing any signs of moving too far away from it. Even around the middle of last year, the 109 level was providing significant resistance and pushing prices lower on a regular basis. Earlier this week, whenever the USDJPY traded above 109, it wasn’t long until it was pushed lower again.
Outgoing Japanese Prime Minister Shinzo Abe announced his resignation last week due to poor health, and has left his successor to tackle the unfinished business of reviving Japan’s economy. His close aide, Chief Cabinet Secretary Yoshihide Suga, has surfaced as the leading candidate to assume the mantle and has said he would “maintain and push forward” with ‘Abenomics’, which involve large-scale monetary policy easing, fiscal spending and structural reforms. The ‘Abenomics’ stimulus policies pursued by Prime Minister Shinzo Abe aimed at pulling Japan out of deflation. Mr Suga added that he would have the Bank of Japan take further monetary easing steps to protect jobs, if he were to become prime minister. "We'll look at developments and if it's necessary to protect jobs, I'd like to promote further monetary policy (steps) because the economy is at a critical juncture," Suga told a news conference after announcing his decision to run for leader of the ruling Liberal Democratic Party (LDP). "Even when the economy is in such a severe state, we were able to create more jobs, the yen is stable around 105 (to the dollar) and the (Nikkei) stock average is around 20,000," he added.
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