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Session close: Settled at .92375, down 90 ticks
Fundamentals: The Yen’s carry trade got hammered from all angles today. We pointed to rising U.S Treasury yields midweek last week as holding back the bounce in the Yen. However, that rise in yields has continued at a sharp pace and the 10-year U.S Treasury has now stolen all headlines as it tests the 3% benchmark. The rise in U.S yields, which has drastically outpaced that in Japan and other regions, is encouraging buying and short-covering in the Dollar. Manufacturing PMI from Japan missed last night and did not help either. Additionally, BoJ Governor Kuroda said they are a long way from 2% inflation and that policy must remain accommodative. The Bank of Japan meets Thursday evening, U.S hours.
Technicals: On our last FX Rundown, we said, “the failure to get out above major three-star resistance and then the quick retreat does give the bears a clear edge.” This edge has turned into much more now that the market sliced through major three-star support at .9310-.9342 like a knife through warm butter. We see some support near the .9200 area though this is hard to pinpoint; a lot of time and volume was spent their late January and early February. Major three-star support comes in at the 200-day moving average and long-term retracement at .9161-.9163. Only a move back above .9310-.9342 will neutralize this extreme weakness.
Resistance: .9310-.9342***, .9420-.9429***, .9465*, .9500-.9512**, .96145***, .9729***
Support: .9200**, .9161-.9163***, .9073**
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