In a similar reaction of what has happened after the release of June Japanese CPI, USDJPY has got back down after the release of July CPI figure which rose by the fastest pace since 2008 by 0.7% y/y while it was expected to be by 0.6% from 0.4% in June which was the first positive rate since April 2012 showing positive results of BOJ abenomics and no need of further cheap liquidity injection into the Japanese economy for fighting deflation while this figure can open the door for more talking about imposing higher sales taxes after it looked getting cooled recently.
That’s beside the unemployment rate which has fallen to its lowest level since October 2008 to 3.8% while it was expected to stand at 3.9% showing also improving of the current economic stance and no need to add more stimulating measures soon after this probability rose earlier this month following the release of Q2 GDP of Japan which could contain the market sentiment to encourage the traders to wait for a bottom again of USDJPY to restart buying it again pushing it up to 99.14 as the Japanese economy has grown by only 2.6%y/y and 0.6% q/q while the market was waiting for 3.6% yearly and 0.9% quarterly after cheeriness had followed the figures of the first quarter which came previously to show growing by 3.8% yearly and 1% quarterly to support the Japanese yen again after it had been under pressure led USDJPY to reach 103.72 last May.
USDJPY has failed to continue rising over 98.5 to fall below 98 and god willing it can meet no in its way down supporting level again at 97.44 and breaking it can lead to 97.2 before 96.80 whereas it has managed this week to rebound after reaching it on a risk aversion wave contained the markets after growing risks of imposing military action against the Syrian regime can lead to risky reaction can drive the energy prices up and threat the global recovery while getting down further can be met by another supporting level at 95.79 before 93.75 whereas the lowest level since falling from 103.72 but rising up from here can be met now resistance at 98.5 before 99.14 whereas it has failed to continue rising last week to manage to get down before breaking the trend line resistance which is extended from 103.72 to 101.56 to lose momentum again and to continue trading below it in a dovish sign but rising over it can increase this momentum again with a great probability of breaking 100 psychological level which can be followed by another resistance at 100.83 which can be followed by meeting 101.56 again before 102.56 and its breaking too can lead to its formed top on 22nd of last May at 103.72
FX Market Strategist
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Walid Salah El Din
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