The USD/JPY has recovered from intraday lows, bouncing off of our 1st tier uptrend line. The currency pair is now continuing its consolidative pattern just below its highly psychological 90 level. The USD/JPY weakened during the Asia trading session after Core Machinery Orders printed much higher than analyst expectations (10.5% vs. 3.4% expected). The impressive CMO number is the highest reading since July 2008, indicating export demand and manufacturing production may be taking a turn for the better. China's wave of economic data may help explain the improvement in Japan's CMO, since China's retail sales printed better than expected at 16.2% and Industrial Production at 16.1%. The outperformance of China's economy is likely benefitting Japanese manufacturers since they are top trading partners.
The intraday recovery of the USD/JPY is a bit counterintuitive, and may be a result of buyers jumping in at key technical supports. Technically speaking, the psychological 90 area continues to be a tough psychological area to leave behind. Meanwhile, our 1st and 2nd tier uptrend lines are still serving as technical cushions along with October lows. Therefore, the USD/JPY still has some solid technical cushions in place. As for the topside, the USD/JPY faces resistances in the form of multiple downtrend lines along with the psychological 90 level and 10/12 highs. Japan will be relatively quiet on the data front for the remainder of the week, leaving its upcoming movements in the hands of broad-based Dollar sentiment. However, we will keep a close eye on any reversal in correlation since the USD/JPY has been a bit scattered lately.
Present Price: 89.83
Resistances: 89.92, 90.04, 90.19, 90.31, 90.43, 90.58, 90.72
Supports: 89.71, 89.54, 89.43, 89.26, 89.15, 88.99, 88.83
Psychological: 90, November and October Lows