By Fast Brokers – The USD/JPY has been anchored between 91-92 despite this week’s strong risk rally. Both the Cable and the Aussie have logged considerable gains over the past two trading sessions as bulls find salvation in a lack of developments in troubled EU economies. Additionally, Australia employment and China export data both printed strong, boosting confidence in the sustainability of the global economic recovery. However, China’s industrial production dragged and Chinese equity investors are still convinced that its economy is slowing. Uncertainty in China could be keeping the USD/JPY at bay as investors aren’t quite ready to jump head first in the risk pool. Meanwhile, Naoto Kan warned that Japan could face default if the government doesn’t get its fiscal house in order. Therefore, it seems the fiscally conservative Kan is stepping forward rather than the Kan who previously favored a weaker Yen. It seems Kan could be setting Japanese citizens up for higher taxes and budget tightening measures in order to help the DPJ gain momentum ahead of next month’s upper house parliamentary elections. Fiscal conservation could prove to be a yen positive and could be another force keeping the USD/JPY range bound despite this week’s return to risk. The risk trade will get another test today with the U.S. releasing retail sales and consumer sentiment figures. Consumption related economic data tends to have a larger impact on the USD/JPY than other U.S. fundamentals since Japan’s economy is highly dependent on exports to the U.S. Therefore, should U.S. retail sales surpass expectations this could help boost the USD/JPY towards previous June highs. On the other hand, if today’s U.S. consumption data disappoints this could drag the USD/JPY back towards June lows.
Technically speaking, the USD/JPY faces multiple downtrend lines along with 6/7 and 6/4 highs. As for the downside, the USD/JPY has technical supports in the form of multiple uptrend lines along with 6/7 and 6/1 lows. Additionally, the highly psychological 90 level should serve as a solid technical support should it be tested.
Present Price: 91.56
Resistances: 91.70, 91.80, 91.97., 92.11, 92.25, 92.39, 92.58
Supports: 91.53, 91.38, 91.29, 91.13, 91, 90.86, 90.74, 90.62
Psychological: .90, .92, June highs and lows
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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.
