By Fast Brokers – The USD/JPY is moving sideways today despite volatility around the FX market in response to China’s solid Trade Balance data. The huge increase in China’s imports is certainly an encouraging sign for Japanese exporters and manufacturers. One may expect the USD/JPY to decline with today’s return to the risk trade in most major Dollar pairs. However, the USD/JPY is about where we left it on Friday while trading above 1/7 lows. On the other hand, the USD/JPY may opt to participate with its broad-based Dollar correlation should the EUR/USD and GBP/USD extend their present gains beyond more topside technical barriers. The USD/JPY’s resilience may stem from last week’s flip-flop from Japan’s new Finance Minister Kan. Kan first sparked a rally by stating he favors a weaker Yen, yet revised his comments to display a preference for market-determined levels after the USD/JPY broke through December ’09 highs. Hence, investors may be holding pat on the USD/JPY until they get a better idea of exactly where Kan stands. Meanwhile, the USD/JPY could come back alive with tomorrow’s U.S. Trade Balance data. Solid U.S. imports could further stoke optimism concerning a recovery in Japan’s economy.
Technically speaking, the USD/JPY’s uptrend is still intact and the currency pair is holding strong above previous January lows while setting higher lows. Meanwhile, the USD/JPY faces topside technical barriers in the form of our multiple downtrend lines along with 1/07 highs. Our 3rd tier downtrend line runs through August ’09 levels. Hence, a clear breakout above this downtrend line could signal a more prolonged uptrend and a potential retest of the highly psychological 100 area over the medium-term. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with 1/7, 1/5, and 12/24 lows. Furthermore, the psychological 90 area could serve as a technical cushion should conditions deteriorate.
Present Price: 92.44
Resistances: 92.47, 92.63, 92.83, 93.21, 93.44, 93.77
Supports: 92.26, 92.04, 91.88, 91.45, 91.22
Psychological: 95, 90, January and September Highs
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