By Fast Brokers – The USD/JPY is clawing back towards our 2nd tier uptrend line after dipping below for the 4th time in the past month. However, volume cooled to the downside and bulls came to the defense of the currency pair. Even though volume didn’t match the potential significance of the movement, this contraction below our 2nd tier was still larger than the previous three. Therefore, we’ll keep a close eye on volume and price over the next 24 hours, especially since we have several trend lines approaching their respective inflection points. In the mean time, Japan will release two more data points, including its corporate service price index and the nation’s trade balance. Analysts are expected Japan’s trade balance to turn into a surplus for the first time since August 2008. It will be interesting to see how exports fared since Japan’s economy is highly reliant on its manufacturing base. Regardless, the USD/JPY has been trading at an abnormally low level, and the Yen’s strength is certainly taking its toll on Japan’s economy.
We maintain our negative outlook on the USD/JPY since it is positively correlated with U.S. equities and we spot trouble ahead for the S&P. If the USD/JPY’s 2nd tier uptrend line doesn’t hold, we could witness a near-term pullback towards our 1st tier uptrend line, which is quite a ways off. The USD/JPY has been stable for a while now, and any contraction beneath May lows would certainly be noteworthy. The battle between the uptrend and the downtrend ensues as investors slug it out over a trend. Therefore, investors should keep a close eye on the ability of the S&P futures to remain relatively close to their highly psychological 900 level.
Present Price: 95.70
Resistances: 95.82, 96.33, 96.90, 97.45, 97.58
Supports: 95.20, 94.45, 93.76, 93.32, 92.69
Psychological: 95, 100
Market Commentary provided by Fast Brokers.
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