By Fast Brokers – The USD/JPY is reacting negatively to the inflection point of our 2nd tier uptrend and downtrend lines. Investors continue to favor the Yen in the wake of a shift in Japanese governmental power to the DPJ. Investors are speculating the DPJ’s more conservative fiscal stance will result in a stronger Yen as we recognize similar pullbacks in both the EUR/JPY and GBP/JPY despite the Greenback’s broad-based depreciation. To exacerbate the rush to the Yen, Japan reported some positive economic data today for a change of pace. Prelim Industrial Production, Retail Sales, and Average Cash Earnings all exceeding analyst expectations. Hence, investors have just another incentive to favor the Yen over the Dollar. However, investors should keep in mind Japan’s wave of economic data over the past week has been negative for the most part. Investors will be paying close attention to China’s Manufacturing PMI data late Monday. If China’s economic data continues to cool down, the USD/JPY may hit a bottom since investors will be concerned about the impact this will have on China’s demand for Japanese exports.
Meanwhile, the USD/JPY is drifting uncomfortably far away from our 1st tier and 2nd tier uptrend lines, indicating a retest of July lows. As a result, it will important to see whether the USD/JPY can recover from today’s pullback and climb into the safety of our 1st tier uptrend line. Regardless, the USD/JPY is burning bridges while flirting with the idea of retesting yearly lows. Therefore, it’s safe to say the USD/JPY’s downward momentum is in the driver’s seat. The currency pair has quite a battle ahead of itself to the topside. Focus will return to China, the U.S. and Britain with Japanese elections and economic data out of the way. As a result, we will monitor which correlations come into play over the next 24 hours.
Present Price: 92.73
Resistances: 92.98, 93.17, 93.27, 93.54, 93.74
Supports: 92.73, 92.55, 92.36, 92.08, 91.91
Psychological: 95, 90
Market Commentary provided by Fast Brokers.
Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
