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USD/JPY bulls stacked up on US and Japan economic divergences

FXStreet (Guatemala) - USD/JPY is trading at 113.64, down -0.02% on the day, having posted a daily high at 113.81 and low at 113.41.

USD/JPY maintains its position while BoJ Governor Kuroda explained today in a speech that the Central bank will continue to ease until their target of 2% inflation is stable while they are content with the effects of their action so far and going in the right direction. Kuroda said the BoJ will make the appropriate checks and adjust policy as needed without hesitation and will do whatever they can to overcome deflation with unwavering commitment.

USD/JPY is testing key resistance at these levels yet the bullish motivation remains strong in respect of the divergences between the US economic recovery and that of both European Japan. Analysts at Rabobank target 120.00 USD/JPY on a 12 month view partly on this basis. “Economic recovery is not firmly established in either the Eurozone or in Japan and aggressive policy stimulus by the ECB and the BoJ is set to continue for some time. The bullish arguments in favour of the USD vs. both the EUR and the JPY are thus compelling”…. "The USD index at 87.15 is not drastically below its average rate since the start of the century (88.83), while on several measures of purchasing power parity EUR/USD is now reasonably well priced while the JPY is now undervalued”, explained Jane Foley, Senior Currency Strategist at Rabobank.

USD/JPY noteworthy levels

Current price is 113.64, with resistance ahead at 113.67 (Daily Open), 113.69 (Daily High), 113.78 (Monthly High), 113.78 (Weekly High) and 113.78 (Annual High). Next support to the downside can be found at 113.52 (Daily Classic PP), 113.51 (Hourly 20 EMA), 113.41 (Daily Low), 113.17 (Yesterday's Low) and 112.82 (Daily Classic S1).

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