The USD/JPY is popping off our 1st tier uptrend line and is trading back above the psychological 95 level as we type. Today’s move higher is clearly an act of correlation. There’s no game-changing news on the wire from Japan, and the Dollar is appreciating rapidly against the Pound after the BOE’s injection of liquidity.

We notice a broad-based appreciation of the Dollar as well as negative consolidation in both gold and the S&P futures. Hence, it seems investors are making a little run to safety in light of the BOE’s cautious stance at today’s monetary policy meeting. We believe the USD/JPY’s solid move higher clarifies this assumption as the currency pair benefits from a return to the Dollar.

Meanwhile, the USD/JPY is experiencing considerable strength along our 1st tier uptrend line. The USD/JPY has been resilient as of late, meaning the currency pair may have what it takes to test our 3rd tier downtrend line. Our 3rd tier downtrend line is the next blockade to the upside. Therefore, a test is likely as long as the USD/JPY creates some space between price and our 1st tier uptrend line. On the other hand, we’ve seen the USD/JPY make promising moves time and again, only to revert to its old consolidative habits and retrace back beneath our 1st tier uptrend line. Hence, bulls shouldn’t get their hopes up yet.

Present Price: 95.55

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