The main catalyst behind the heavy buy orders entering Yen crosses has been comments from Lael Brainard, the United States Under Secretary of the Treasury for International Affairs, who said past 20GMT that the US supports Japan’s efforts to boost economic growth and beat a 2-decade long deflation cycle.
The comments are undoubtedly bullish the pair as global speculators find now another reason to dump the Yen. Mr. Brainard headlines imply there is now a stone out of the way in terms of any potential impediment by the US and by association, the international community - US is still the main voice - , to get on the way of Japan's new macro-strategies, so that they can do its utmost to prompt its economy and annihilate both deflation and as a by-product, the value of its currency.
According to Kathy Lien, co-founder at BK Asset Management, "most significant resistance level now at 2010 high of 94.98." The breakout from 94.05 former high, which dates back from Feb 6, has taken place in a fast and furious fashion, in what can be characterized as a typical clean breakout, suggesting buyers were firmly committed on the last long push.
More often than not, when such neat upside resolution occurs, dip buyers tend to be on alert monitoring prices to try to join the uptrend on possible dips back to retest the breakout point around 94.00/05. The first level to regain by sellers to attempt a reversal is found at 93.80/90, yet as long as above 93.20, buyers should be in control.