By Fast Brokers – The USD/JPY was negated by our 3rd tier downtrend line and is sinking during the U.S. trading session as investors react to a weaker than expected U.S. Employment Change figure. The pullback in employment data appears to be delivering a blow to the FX market as we witness Dollar weakness across the board. Investors should keep in mind that the Dollar’s December rally was triggered by a turnaround in U.S. employment. Hence, it’s understandable that investors are selling the Greenback in reaction to today’s data release. In addition to the discouraging U.S. jobs data, Yen investors are also reacting to remarks from Finance Minister Kan. Recall that yesterday’s pop in the USD/JPY was instigated by Kan stating that he may favor a weaker Yen to support Japan’s struggling manufacturing sector. However, Kan revised his comments today and explained that currencies should be determined by market forces. On the other hand, the government may intervene should the Yen reach abnormal levels. Kan’s retreat is very similar to when Fuji clarified his own aggressive monetary comments after taking office last year. In all, Kan’s more moderate monetary comment is cooling the USD/JPY’s upward momentum.
Technically speaking, the USD/JPY’s uptrend is still intact and the currency pair is 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. Meanwhile, investors should monitor broad-based activity in the Dollar to determine whether today’s U.S. jobs data will have a large impact on the major Dollar pairs as the trading session progresses.
Present Price: 92.47
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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