Failure at 100.00 leaves USD/JPY adrift

FXstreet.com (Córdoba) - USD/JPY bulls seem undetermined to take the 100.00 mark. After days of gains, USD/JPY suddenly lost momentum and slowed the rate of rise on the approach the critical point. The cross has entered in a consolidation pattern after reaching a high of 99.94 and even fell below 99.00 amid profit taking, leaving analysts wondering whether there is a top in place.

The TD Securities team notes that the USD/JPY selloff seen during the Asian session coincided with heavy trading in Japanese equities as well as more extreme volatility in JGB futures. "For the JPY, flows are largely at play here, as aggressive BoJ policies suggest it is only a matter of time before we break above the psychological 100 barrier", TD says.

Meanwhile, Kathy Lien, analyst at BK Asset Management notes that very strong retail sales numbers were needed for USD/JPY to break 100 and the fact that spending declined means that USD/JPY is likely to end the week on the 98 handle.

For its part, the UBS analyst team commented that markets calmed down after verbal interventions by Finance Minister Aso and BoJ Governor Kuroda past Wednesday and so USD/JPY stayed clear of the critical resistances at 100 and 101.5. "100 might be tested, but 101.5 should hold", UBS says.

Technically speaking, the bullish strength started to fade from short term charts, as daily indicators correct from overbought conditions. A break above 100.00 would probably unleash a bullish storm as stops are eagerly waiting, with the 100.40 area as next target.

On the downside, the 98.25 level, which represents the 23.6% retracement of the 92.71/99.94 rally, is key support level in the short term.