The USD/JPY is continuing its consolidation between our 1st and 2nd tier uptrend lines as the S&P futures hover just above their psychological 1100 level. Not much has changed since yesterday despite another wave of negatively mixed U.S. econ data. The story remains the S&P's resilience above 1100 despite econ data indicating a slowdown in the pace of America's economic recovery. If the S&P can manage to move higher regardless of disappointing data, then another wave of broad based Dollar weakness may kick-in, thereby weakening the USD/JPY.
Meanwhile, investors shouldn't forget that Japan's Prelim GDP topped expectations by 5 basis points to kick off the week. Therefore, one may expect investors to send the USD/JPY lower due to a more favorable outlook for the Yen as compared to the Dollar. However, the USD/JPY is continuing to hold strong above our 1st tier uptrend line since the currency pair is drifting closer to a key retracement towards October lows. Regardless of the USD/JPY's present resilience, there is still a long-term downtrend at play and our technical cushions are wearing thin.
Technically speaking, the USD/JPY is presently fighting to stay above our 1st and 2nd tier uptrend lines. Should our 1st tier give way, the currency pair still has 10/2 lows along with October lows serving as technical cushions. As for the topside, the USD/JPY faces multiple downtrend lines along with the highly psychological 90 level. Therefore, quite a few topside challenges are in place. Meanwhile, investors should continue to monitor the S&P's interaction with 1100 as well as the reaction of equities to tomorrow's weekly Unemployment Claims release.
Present Price: 89.18
Resistances: 89.31, 89.41, 89.54, 89.68, 89.83, 89.89, 90.07
Supports: 89.15, 88.99, 88.85, 88.73, 88.58, 88.44
Psychological: 90, November and October Lows