Forex: USD/JPY higher but limited below 93.69

FXstreet.com (Barcelona) - Having reached as high as 93.69 during the Asian session, the market erased gains and went as low as 93.34 to test for support ahead of the European opening. Then, a new test of the highs confirmed resistance there, pulling the USD/JPY to the 93.50 area.

Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ, said that the decision from the BOJ will be key and certainly notable steps will have to be taken in order to meet current high expectations, and that is crucial for the direction of the yen that Japanese investors respond by exporting capital into foreign markets, or accepting greater foreign currency risk through a reduction in current hedge ratios. “We suspect that these entities may well start to reduce their foreign currency hedging although this may only materialize at levels closer to the 90.00 level in USD/JPY. But how aggressive the Kuroda BOJ will become will also determine the timing of a potential change in hedging flows”, Halpenny wrote.

“The rebound above 92.54 should be considered corrective while 93.85 resistance area remains intact and my outlook here is bearish, for a slide through 92.50, towards 90.80 major low”, wrote Deltastock.com analyst Stoyan Mihaylov.