By Fast Brokers – The USD/JPY is consolidating psychological 90 level along with our 2nd and 3rd tier downtrend lines in reaction to stronger than expected Trade Balance data from Japan. The Trade balance data shows encouraging improvements in export demand, particular from Asian countries. Hence, it seems robust demand from China has managed to buoy Japanese exporters while demand from the West remains at discouraging levels. Although one may expect the USD/JPY to decline in reaction to today’s data with investors favoring the Yen, the currency pair has opted to hold strong above its highly psychological 90 level. The USD/JPY’s resilience likely has to do with a combination of an improvement in U.S. econ data coupled with the BoJ’s recent monetary policy statement. The BoJ stated that it is steadfast on fighting deflation, meaning it could maintain its dovish monetary policy for quite some time. The BoJ’s commitment to a loose monetary policy sent the USD/JPY beyond our 2nd and 3rd tier downtrend lines last week, which run through October highs. Hence, should the USD/JPY create some topside separation, the currency pair could piece together a solid near-term run towards 92. That being said, the USD/JPY still does face multiple downtrend lines along with previous December highs. Furthermore, the USD/JPY’s longer-term downtrend is still in play. Hence, the road higher could be rocky ahead should the currency pair’s positive momentum persist. Meanwhile, investors should keep an eye on broad-based activity in the Dollar since the EUR/USD and GBP/USD dropped below some key uptrend lines recently. Further deterioration in these currency pairs could yield strength in the USD/JPY.
Technically speaking, the USD/JPY faces topside technical barriers in the form of previous December highs along with our 4th and 5th tier downtrend lines. Furthermore, the psychological 90 area could still play a role considering how tough the trading zone has been to overcome in the past. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday, 12/14, and 12/09 lows. Meanwhile, the psychological 90 level could begin to work as a technical cushion.
Present Price: 90.53
Resistances: 90.58, 90.76, 90.94, 91.05, 91.22, 91.39
Supports: 90.36, 90.25, 90.10, 89.90, 89.75, 89.52
Psychological: 90, December Highs and Lows
Market Commentary provided by Fast Brokers.
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