FX.co ★ Technical analysis of USD/JPY for 16.01

The Japanese economy will grow 1.4% in the current year as World bank forecasts. Aggressive fiscal and monetary easing have flashed a strong cyclical recovery. Japan will continue to grow above potential and will finally exit deflation. BOJ quantitative easing is manifesting itself through reflection in corporate profits.

From last couple of months global macro hedge funds started shorting Yen against US dollar and building long positions in В Nikkei index futures. This is the most profitable trade of gaining almost 4%. The Japanese prime minister MR Abe targeted inflation at 2% for a sustained period of time.

In the currency front the weakness of yen has taken some credit for Japanese rally and a global stimulus of sorts recently. Since 2012 USDJPY has made a tremendous rally. Now it seems to make a pull back from its peaks, showing a negative divergence on charts.

In the daily charts, oscillators gave a negative divergence. Prices holding above 21EMA at the level of 104.5 after breaking the major support trend line tailing from last 4 months, it signs the first bearish note. To confirm this view, we need to wait for a couple of trading days.

Resistance- 105.5.

Support- 104, 102.8.В