The USD/JPY sank beneath July lows earlier today despite a much weaker than expected Core Machinery Orders number. The setback in Core Machinery Orders is a bit disconcerting for Japan's economy, yet could help buoy the USD/JPY today as investors show a slight preference for the Dollar amid mixed global economic data. Ironically, the decline in Japan's CMO coincides with a widening of America's Trade Balance. The increase in U.S. imports would lead one to believe that Japanese exports are improving. However, the rapid of the appreciation of the Yen isn't helping struggling Japanese exports too much. Regardless, the mixed global data is helping the USD/JPY bounce off of our 1st tier downtrend line.
Japan's Trade Balance data later tonight will be overshadowed by China's wave of data. China is the engine of growth for the global economic recovery. Therefore, the USD/JPY's immediate-term path will likely depend on the broad-based reaction of the Dollar to China's economic data, particularly Industrial Production. The slight improvement in American demand for China's exports confirms our suspicion the red state's data should outperform expectations. Tuesday was a key technical session across the board, highlighted by breakouts to the topside in both the EUR/USD and GBP/USD along with a dive beneath September lows in the USD/JPY. We expect these trends to continue over the near-term, meaning we could be talking about the psychological 90 level soon. However, even if the USD/JPY should weaken further, the currency pair has historical consolidation beneath present levels dating back to January and February trading ranges. Furthermore, the USD/JPY has the highly psychological 90 level to fall back on should the downturn pick up speed again. As for the topside, our 1st tier uptrend line is fading into the distance, a disconcerting technical development. For the time being, the USD/JPY must first get back above Tuesday highs.
Present Price: 91.88
Resistances: 91.96, 92.06, 92.27, 92.40, 92.54
Supports: 91.79, 91.64, 91.50, 91.41, 91.27