By Fast Brokers – The USD/JPY continued to strengthen today, driving north towards 1/14 highs as the Dollar strengthened across the board. Investors exited the risk trade in a hurry after China’s CPI and PPI data printed hotter than analyst expectations, indicating China’s central bank may need to tighten liquidity to temper inflation. A more hawkish monetary policy stance from China could have ramifications for the global economy as a whole since China has been an engine driving the recovery. Investors reacted by heading to the Dollar for safety, a positive development for the USD/JPY considering the BoJ is intent on countering deflation. However, the USD/JPY seems to be topping out at our 1st tier downtrend line, just below 1/14 highs, after U.S. economic data printed weaker than expected. Both weekly Unemployment Claims and the Philly Index disappointed, implying the Fed could refrain from tightening liquidity. The Dollar has weakened in reaction and this development has stalled the USD/JPY’s advance. Meanwhile, investors are awaiting Obama’s proposal for future financial reform. The U.S. and Japan will be quiet on the data wire tomorrow.
Technically speaking, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday and 1/19 lows and the highly psychological 90 level should it be tested. As for the topside, the USD/JPY faces multiple downtrend lines along with 1/14 and 1/12 highs.
Present Price: 91.76
Resistances: 91.46, 91.63, 91.84, 92.04, 92.25, 92.46
Supports: 91.12, 90.91, 90.75, 90.54, 90.37, 90.24
Psychological: 90, January highs and lows
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