By Fast Brokers – The USD/JPY is turning south from our 3rd tier downtrend line as we notice a Dollar appreciation across the board today. We haven’t seen any abnormal volume to the upside on the 1-day chart, leading us to believe that the USD/JPY may remain in its steady downtrend. It would take an aggressive movement to the upside past May highs and our downtrend lines on substantial volume for us to alter our negative outlook on the currency pair. On the other hand, we do notice some near-term downward pressure on both the GBP/USD and EUR/USD. If the USD/JPY keeps its new negative correlation with these currency pairs and they weaken from further levels, the USD/JPY could make a push for 100. However, the correlations between the USD/JPY and these currency pairs are fragile because they exhibited a positive correlation since last September. It will be very interesting to see how the USD/JPY behaves over the next few trading sessions, and whether the currency pair can piece together some upward momentum.
Meanwhile, investors will keep a close watch on the Core Machinery Orders release from Japan later today. Core Machinery Orders are forward looking since the purchase of heavy machinery normally indicates an expected increase in production, telling us a lot about Japanese exports and consequently global demand and consumption. Core Machinery Orders have climbed back to respectable levels since January’s shocking negative number. Analysts expect an increase of 0.1%, and the release is likely to be a market mover.
Fundamentally, we find resistances of 97.98, 98.66, 99.49, 100.06, and 100.74. To the downside, we see supports of 97.45, 96.90, 96.33, 95.82, and 95.20. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 97.60.
Market Commentary provided by Fast Brokers.
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