By Fast Brokers – The USD/JPY is continuing its steady decline today as investors snap up the Yen for multiple reasons. News hit the wires that the BoJ may raise its forecast for Japan’s economic growth. The BoJ’s brighter outlook signals that the central bank is becoming comfortable with the improvement in export demand fueled by an economic recovery around the Pacific. However, Core Machinery Orders data printed below analyst expectations, showing capital expenditure may be slowing as near-term capacity overshoots. Regardless, improvements in Japan’s economy has led investors back to the Yen as they also cash in on the USD/JPY’s impressive run over the past month. Meanwhile, weekly U.S. Unemployment Claims rose unexpectedly, denting optimism surrounding the America’s recent data flows. Hence, investors are taking the opportunity to divest a bit from the Dollar as they monitor conditions in Greece and the EU as a whole. Meanwhile, despite this week’s weakness in the USD/JPY, this currency pair is still locked into its new uptrend with solid supports waiting below. Investors still seem confident about propping up the USD/JPY since the BoJ has its hands tied by the DPJ. Governmental elections are around the corner, and the BoJ would be hard pressed to tighten liquidity considering the DPJ has been adamant about its desire to fight deflationary pressures. Therefore, it is perceived that the Fed is prone to tightening before the BoJ, giving the USD/JPY a longer-term relative strength unless conditions should change fundamentally.
Technically speaking, the USD/JPY faces technical barriers in the form of previous April highs and the currency pair’s psychological 95 level. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday, 3/30, and 3/25 lows. Additionally, the psychological 93 level could serve as a psychological cushion for the near-term.
Present Price: 93.14
Resistances: 93.31, 93.45, 93.57, 93.71, 93.86, 94.06, 94.26
Supports: 93.04, 92.84, 92.70, 92.59, 92.40, 92.26, 92.09
Psychological: .94, .93, 2010 highs
(click chart to enlarge)
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