Forex: USD/JPY testing the 94.00 resistance level

Perhaps no pair has received more attention recently than the USD/JPY – rightfully so following the G20 drama that unfolded last week. At the onset of the trading week, the USD/JPY has edged higher, as the weakness in the yen refuses to abate. Following a brief test of the 94.21/23 resistance (session high), the pair has eased slightly back towards the 94.00 level/initial resistance in these moments, presently securing an advance of +0.37% on the day.

According to Slobodan Drvenica, an analyst at Windsor Brokers Ltd., “Amidst a fresh rally and weekly gap-higher opening, along with the previous break above the psychological 94.00 barrier, we see scope for retest of recent highs and near-term range top at 94.40/45 up to a resumption of the broader uptrend towards the next target at 94.97 (May 2010 high).”

The USD/JPY resumed its uptrend overnight in the wake of the weekend G20 statement, which made no explicit mention of Japan or the weakening yen. In fact, the right to use "monetary policy" to ensure "domestic price stability" was enshrined in the text. “That does not mean countries may exploit this as a vehicle specifically to influence exchange rates, however entrenched deflation in Japan would appear to provide justification enough for more easing.” writes Research Analyst Gareth Berry at UBS.

The USD/JPY is presently testing the 94.00 barrier/resistance, and a movement in excess of this realm will lead to further correction at 94.21 (session high), and 94.40. Conversely, a pullback towards the 93.83 region will usher in a wave of supports at 93.64, 93.45 and finally 93.30, notes Drvenica.