The USD/JPY is experiencing some solid support as bulls put up a fight around our 97.59 level. Economic recovery hopefuls aren't so eager to give up on their vision, and are doing what they can to prevent a retraction below our key 1st tier downtrend line.

Therefore, even though the USD/JPY is trading below our 1st tier uptrend line, the possibility of the currency pair continuing its battle with 100 isn't lost. That being said, despite the strong defense by the bulls, the USD/JPY should ultimately follow its positive correlation with U. S. equities like the rest of the major dollar pairs.

Hence, should the S&P futures collapse, the USD/JPY may be inclined to follow suit, and vice versa. However, the Japanese economy is faring worse than America's right now, meaning any movements to the downside could be limited compared to those logged in U. S. equities.

On the flip side, were the S&P futures to break out above 900 we could see investors making a larger commitment to risk-taking and consequently a 100-plus reality in the USD/JPY. Investors will be keeping a close eye on earnings and forecasts coming from the major Japanese automakers over the next couple weeks. Weaker than expected performances from the automakers could help strengthen the USD/JPY.

Meanwhile, our 1st tier downtrend line still serves as a key cushion to the downside. Losses could accelerate should the currency pair dip beneath our 1st tier.

Fundamentally, we hold our resistances of 98.56, 99.20, 99.79, 100.28, and 100.71.

To the downside, we maintain our supports of 97.59, 97.11, 96.33, and 95.55 with fresh bottom-end of 95.04.

The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.

The USD/JPY is currently exchanging at 98.12.

Copyright 2009 FastBrokers, Latest Forex News and Analysis for Forex, Bullion and Commodity Traders. 

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