Forex Trading: USDJPY Corrects After Dismal New Home Sales But Holds Above Key MA Support
The USDJPY surge higher was slowed on the back of the dismal US New Home Sales. Sales fell to an annualized rate of 308,000, the lowest pace record. Moreover the supply of homes rose back up to 9.2 months. A normal market has supply at 5-6 months.
In a separate announcement today, Bank of America is expected to issue up to 30% principal reduction for homeowners who have mortgages at 120% of home value in an attempt to stop the onslaught of foreclosures and reduce the glut of homes for sale on the market.
The correction in the USDJPY comes after a surge higher today that has seen the USDJPY move above key ceiling resistance at the 90.72-79 area and the 200 day moving average at the 91.57 level. A close above this key moving average today will be the first since August 13th 2009 at the 95.94 area. Look for support against the level on dips with additional pressure if the price level does not hold.
If the price is able to stay above, there should be further upside momentum for the pair with upside targets of 92.14 and 93.12 (50% of the 2009 high to low trading range.
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