Previously bearish USD/JPY gets major shot in the arm from Japan’s talk of cutting taxes

FXstreet.com (Barcelona) - The USD/JPY bulls caught a major break early Thursday as the Yen tumbled on corporate tax cut talk out of Japan. The news started things but short-covering took over shortly thereafter – taking the cross from 98.26 to 99.10 in only two hours.

USD/JPY to digest this surprise now and US data later Thursday

USD/JPY traders will continue to digest the tax-cut news and re-position portfolios as they see fit under the “new” market conditions. However, later on Thursday they get US GDP and pending home sales data to consider.

Technical outlook for USD/JPY

Technicians note that if the USD/JPY can manage a close above 98.81 the cross will succeed in posting a bullish engulfing candle – which typically marks at least a short-term bullish turning point. Major resistance, however, comes in at 99.52. Support below 98.81 comes in at the session low of 98.26.