US dollar/yen prices, charts, and analysis:
In the Asian session, the USD/JPY pair traded over the 132.00 level, setting a new 3-week high. In response to Friday’s prolonged climb, the dollar index appears to be erasing some of its gains at the start of the European session.
Following a Nikkei story that the Japanese Government had approached Deputy Bank of Japan (BoJ) Governor Masayoshi Amamiya as a prospective successor to Governor Kuroda, the Yen came under pressure during the Asian session. Amamiya is credited for helping to create the BoJ’s loose monetary policy, and the weaker Yen was evidence of this. Since then, the Japanese government has denied reports that it contacted Amamiya with information about the incoming BoJ Governor, who would be introduced sometime in February.
Off the coast of South Carolina, the US shot down what it claimed to be a Chinese surveillance balloon that had violated US airspace. Chinese balloons penetrated US airspace three times during the previous administration, according to a statement from the US Defense Department that was issued over the weekend. The report is expected to dampen spirits because investors were anticipating a quick recovery of Chinese economy demand in February.
TECHNICAL PERSPECTIVE
Technically speaking, the USD/JPY had a big weekly candle close last week, surpassing both the psychological 130.00 level and the falling trendline. A reflection of the bullish momentum at work, the weekly candle finished as a hammer candlestick with little to no upside wick. We did gap up over the weekend, and it’s still possible that we’ll close the gap at 131.200 before pushing higher. On the upside, the 50-day MA might act as resistance at the 133.90 Level, with the 134.45 handle acting as horizontal barrier.