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The US Dollar inching upward against the Japanese Yen, pushing off support at the bottom of a rising channel support set from early February. The first layer of significant resistance is at 102.84, the 23.6% Fibonacci expansion. A break above that on a daily closing basis exposes the 38.2% level at 104.14. Alternatively, a turn below the channel bottom (now at 101.68) aims for the February 4 low at 100.75.
Although one can make a compelling argument for a long trade at current levels, we will tactically opt to stand aside. We see the possibility of emerging Yen strength in the near term as fading doubts about the continuity of the Fed’s QE “tapering” effort spark risk aversion, driving haven JPY demand.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com