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Forex: USD/JPY falls as Japan PM Abe finds resistance from inside

Capped at 93.73 by the start of Friday, the USD/JPY then fell across the chart, allowing Japan's Nikkei Stock Average to drop again today (-1.80%), putting an end to the weekly winning streak of 12 weeks. At 07:00 GMT, the pair fell sharpened the plunge, quoting below the 93.00 handle, to as low as 92.88 as of writing.

Current price action may be in response to newswire reports that Prime Minister Abe may have to settle for a less radical candidate to succeed BoJ Governor Shirakawa. “Abe's desire for much bolder monetary easing is reportedly meeting resistance from inside the MoF, the BoJ, and even within his own cabinet, on fears that radical easing could unsettle the JGB market”, wrote UBS analyst Gareth Berry.

Japan's Eco Watchers Survey points to a higher outlook, from 51.0 to 56.5 in January, and better than expeected current situation, from 45.8 to 49.5 (consensus of 48.0).

“The market is under pinned by the 20 day ma at 90.93 and 2 month up channel at 90.29, while above here the market will remain immediately bid. This support is reinforced by the 88.49 4 month uptrend”, wrote Commerzbank analyst Karen Jones, adding that the USD/JPY has already met its target of 93.32/96 (the measurement higher from its triangle and the 38.2% retracement of the move down from 2007 and it is expected to act as a major resistance/target zone for the move).

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