Market Leader and Masterforex-V Academy analyzed the fundamental and technical situation to tell you what awaits USDJPY in the near future to help you make more weighted trading decisions.
At this point, Market Leader reports that the fragile economic recovery in Japan is in jeopardy. In 2013 alone, the Japanese Yen managed to weaken against the US Dollar by 23%! Still, since early 2014, the Japanese currency has already regained 4,4% of its value against its American counterpart. The strengthening of the Japanese Yen, which is a downswing of USDJPY, took place because of big amount geopolitical risks worldwide coupled with an economic slowdown in the USA. Despite considerable growth shown by the Japanese economy in Q1 2014, weaker-than-expected economic figures for Q2 2014 in Japan after raising the sales tax coupled a strong yen may trigger a recession in the Asian country.
On Friday, the BoJ’s Kuroda preserved his optimistic outlook for the Japanese economy, thereby showing confidence that the world’s 3rd biggest economy will eventually manage to cope with the consequences of the sales tax hike. Despite the negative figures, Mr. Kuroda underlined that the BoJ is ready to expand the stimuli of necessary, especially if the inflation falls below the 2,0% target.
At the same time, many currency strategists assume that the Japanese authorities should start acting immediately otherwise it will be too late. In particular, they compare it to the American economy: the US economy was subject to very slow recovery for 3-4 years before actually accelerating.
The Fed responded to the global crisis with monetary stimulation aimed at rebalancing the real economy in terms of households as well as the local labor and housing markets. Still, Japan is almost fully employed, that is why further stimulation is currently facing deterrents. On top of that, Japanese households didn’t feel a major income decline while Japanese corporations are currently abstain from investments (the ageing population doesn’t seem to be interested in innovations). Households keep on saving money to spend them after the retirement. That is why the stimuli may fail to be efficient.
USDJPY: Mid-Term Prospects
According to Masterforex-V Academy experts, the H1 chart of USDJPY shows that the bullish trend has been dominating the market since July 23rd. Still, the price faced resistance around 103,09. After testing it for 3 times, the price retraced back to 102,33. Today, the rally resumed.
According to the synthesis of binary patterns under the Masterforex-V trading strategy, the rally may well continue up to 103,43 or above after breaking the 103,00-103,09 range.
If the mentioned range stays unbroken, the price is likely to retrace further down after breaking below 102,33. If this is the case, we are likely to see the price going down to 102,03 and 101,71.
According to the Binary Options Department of Masterforex-V Academy, binary options trading may give you a chance to generate up to 90% as a ROI if the projection is right. IF to take into account the fact that the current bias is bullish, the experts recommend going long on bearish reactions by purchasing call options and setting their lifetime for 2 hours.