The USD/JPY is trying to wrestle free of its right shoulder with the S&P running past 900.  While the USD/JPY has managed to stay above our 2nd tier uptrend line, the currency pair continues to have issues with our 3rd tier downtrend line.  The USD/JPY is exhibiting a textbook, upward sloping head and shoulders pattern, meaning it will need significant volume to climb past May highs towards the highly psychological 100 level.  100 remains a heavy burden on the bull trend, showing investors will need to be certain of an economic recovery if they are to send the USD/JPY beyond this level and 2009 highs.  That being said, our critical 5th tier downtrend line is slowly creeping towards present price.  If the USD/JPY can hold on and climb above the 5th tier, near-term gains could accelerate. 

However, a lot can happen between now and then.  We maintain our positive outlook on the USD/JPY since the momentum remains to the upside while the currency pair only has a couple barriers standing between it and large gains.  Japan will release its monetary policy meeting minutes late in Thursday’s session, giving investors a peak at the BOJ’s view of the state of Japan’s economy.

Fundamentally, we maintain resistances of 99.20, 99.79, 100.56, and 101.43 with fresh top-end hanging at 102.14.  To the downside, we see supports of 98.67, 97.98, 97.32, 96.33, and 95.58.  The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.  The USD/JPY is currently exchanging at 99.13.

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