By Fast Brokers
The USD/JPY is surging off a much better than expected Prelim Industrial Production Data. The industrial production number shows a sharp reversal from the previous 5 months, and is likely due to a pickup in global consumption as stimulus packages kick in worldwide. The rebound in the USD/JPY is backed by a 4% jump in the Nikkei earlier today. Honda and Pioneer catapulted as investors speculate the worst is behind us. Additionally, we must consider the USD/JPY’s tight positive correlation with U.S. equities. The S&P futures sprinted to new 2009 highs yesterday and are looking to go to work on their highly psychological 900 level.
The recent recovery of the USD/JPY is a breath of fresh air for investors since the currency pair was playing with fire by trading below our 1st tier downtrend and 2nd tier uptrend lines. Meanwhile, the currency pair avoided the idea of retesting March lows, and now looks to have more room to run towards our 99.20 and 99.79 resistances. It will be interesting to see how the USD/JPY reacts should it reach these resistance levels, and whether it can break through to retest the key 100 level once more. Keep in mind we have 4 more downtrend lines bearing down on the USD/JPY, so there is plenty of work ahead to the topside.
Although we’re bullish on the USD/JPY in the near-term, a 100+ future ultimately depends on the performance of U.S. equities and whether they can leave the economic crisis in the background.
Fundamentally, we find resistances of 98.56, 99.20, 99.79, 100.56, and 101.43. To the downside, we see supports of 97.98, 97.11, 96.33, 95.55, and 95.04. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 98.43.
Market Commentary provided by Fast Brokers.
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