"I hope you are well. I was wondering if you could share your view on the USDJPY. Specifically, how long does it look like it will range below 100? How much could it go up after breaching 100 before it retraces, if at all, in the short term? Once it breaches 100, what is the likelihood that it would strengthen below 100 or will 100 set a new level?"

David Fuller's view Thanks for a question of general interest.

The important technical point is that USD/JPY remains in form (weekly 10-Yr, 5-Yr & daily), although it is no longer a one-way street at these levels, unsurprisingly. We know that ¥100 had been a target and it is also a psychological (roundophobia) resistance level. However, the early April reaction was in line with the two previous setbacks and the yen quickly recovered. Therefore I will continue to give the upside the benefit of the doubt, provided the mid-April low just under ¥96 is not taken out.

Politics are obviously a key factor since Japan is belatedly devaluing its currency after years of deflationary economic deterioration. However, so far, the US and other allies are taking a longer-term view, meaning that they would like to see a stronger Japanese economy, not least as a counterweight to China in Asia, despite facing some competitive pressures from Japanese exports as the yen weakens.

Assuming that a clear break above ¥100 occurs, the next psychological resistance areas are near ¥110 and more importantly, ¥120, where you can see a considerable amount of lateral trading before the yen last strengthened. Meanwhile, although none of us can know for sure how far USD/JPY wil move, the defining technical characteristic of this uptrend remains the unbroken sequence of higher reaction lows.