The first salvo

This week had been an eventful week whereby the forex market changed its sentiments like a chameleon change its colors. The early part of the week was defined by indecision with the Dow trading up and down the critical 8,000 mark. The market was basically just waiting for a firm word out of the US Senate for a quick and affirmative passage of Obama's USD 800 bn stimulus package but due to Republican objection to some terms of the package, the passage was delayed.

All else (other economic data) couldn't get their worth's share of the headlines.

USDJPY traded along with equities but stayed within the 88-89 region and accumulated a triangle formation that finally broked out upwards on Thursday. The pair went strong and touched high of 92 plus that day. The stubborn 21 day moving average is clearly broken for 2 days and MACD points to better momentum upwards.

However, is this move sustainable? The big question on many peoples' minds is will USDJPY stay above 90? I think there's a good chance it will.

With the Japanese government deterioriating their finance standing buying up stocks from Japanese banks and issuing debt to support stimulus efforts, not to mention the very poor exports market making JPY demand even lower going forward, USDJPY looks to be supported somewhat.

Afterall, the USD is still the world's reserve currency. My call for USDJPY for next week (week ending 13 Feb) is 90 - 94.