USD/JPY bounces off 127.50

Source: Dukascopy Bank SA


On Thursday morning, the USD/JPY had failed at its second attempt at passing the 127.50 level and a resistance zone, which surrounds it, as the head of the Bank of Japan Haruhiko Kuroda commented on monetary policy and caused a surge of the Japanese Yen.

The Governor of the Bank of Japan stated that the Japanese central bank could execute a smooth exit from the current ultra-easy monetary policy. The statement caused an immediate surge of the value of the Japanese Yen.

The USD/JPY currency exchange rate adjusted to the new fundamental information with an immediate drop down of 45 pips or 0.36%. Afterwards, the decline extended to 63 base points or 0.50%.

From a technical analysis perspective, the move passed the support of the 50-hour simple moving average and hit the support of the weekly S1 simple pivot point at 126.60. If the pair passes below the pivot point, the May 24 low level zone at 126.37/126.50 is expected to act as support. On the other hand, a potential recovery of the US Dollar against the Yen is expected to face resistance in the combination of the 50-hour SMA and the 127.00 level, before reaching the 100-hour SMA near 127.40 and the 127.50/127.60 range.
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