Japan Deputy Economy Minister Nishimura said that Yen at 100 per Dollar is “not a problem”, driving up USD/JPY with traders believing the statement is an indication that the Japanese Government want to see Yen hitting triple digits. Nishimura went on further and comment that BoJ need to ease more to reach the 2% inflation target, with Kyodo News reporting PM Abe is keeping BOJ law revision in its sights to coerce BoJ into stronger actions. Following the rally, price pushed clear of the Kumo, which is a delightful development for the bulls after price threatened to enter deeper into the Kumo just 2 hours before. We’ve also cleared the 89.30 support turned resistance, opening up trading range towards 90.30.
It is important to note that current rally began on the back of better than expected HSBC Chinese Manufacturing PMI. Hopefully we have seen the last of speculators who were playing the BoJ intervention announcement, which will make price more predictable and more reactive towards global economic news.
Divergence is seen on Stochastic, with readings heading lower yet prices heading higher. Upward trendline on the Daily Chart has yet to be broken, showing that bullish momentum is still ongoing. Watch out for price levels when Stochastic reach levels similar to previous bottom on Nov 13. If price is able to stay above the upward trendline, bullish momentum could see an acceleration higher towards 100. Failure to maintain above the trendline on the other hand does not necessary mean that bearish trend is taken place though, with a possibility that price could still recover back towards the trendline.
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