By Fast Brokers
The USD/JPY is making an encouraging move to the upside, running past our 1st tier downtrend line after Japan announced an asset deficit of roughly $6.61 billion. In other words, domestic investors purchased an excess of $6.61 worth of foreign assets, likely participating in the large U.S. Treasury auctions. This news indicates a boost in supply of the Yen, and is weakening the Japanese currency against equal interest bearing currencies such as the Dollar. In addition to the asset purchase news, Japan reported a retail sales number 3 basis points above analyst expectations. Therefore, consumption of retail goods continues to climb back towards reasonable levels, showing consumer confidence is on the rise with the employment market stabilizing.
It will be interesting to see if today’s pop in the USD/JPY receives significant volume. The currency pair faces several downtrend lines to the upside and will need considerable momentum to piece together a fundamental move. We can’t forget that Tuesday’s trade balance was far below analyst expectations, painting a mixed picture of the Japanese economy. Considering the downward forces bearing down on price, we maintain our bearish outlook on the USD/JPY until we witness a fundamental shift to the upside. One thing is for certain, today’s move is encouraging and brushes aside the topic of a rapidly appreciating Yen for the time being.
Fundamentally, we find resistances of 96.90, 97.45, 97.98, 98.59, and 99.25. To the downside, we see supports of 96.33, 95.82, 95.12, 94.43, and 93.77. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 96.84.
Market Commentary provided by Fast Brokers.
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