The USD/JPY is trading lower today in what appears to be a broad-based sell-off of the Dollar. The combination of weak unemployment data and the G20 stating that central banks will maintain their respective loose monetary policies (see EUR/USD commentary) has led investors away from the Dollar and towards riskier assets. Today's trend is a negative catalyst for the USD/JPY since the currency pair has been negatively correlated with the risk trade. Furthermore, the DPJ's more conservative fiscal policy is leading investors to believe that the BoJ will not intervene at present levels. Data-wise, Japan will release Core Machinery Orders late Tuesday night EST along with a wave of Chinese econ data. Therefore, volatility could pick up in the next 24-48 hours, especially if the Asian data points outperform expectations. While analysts are expected continual growth in Japan's CMO data, China's numbers could have a larger impact considering it is Japan's largest trading partner. Further strength in China's economy implies greater demand for Japanese goods, thereby strengthening the Yen. On the other hand, weak Chinese econ data could rattle markets and send the USD/JPY back above 90.
Technically speaking, the psychological 90 area is proving to be a tough psychological area once again. The USD/JPY continues to gravitate towards 90 despite recent hints of a topside breakout. The currency pair is currently trading back below 90, yet is holding above our 1st and 2nd tier uptrend lines. Hence, there are a few more technical cushions separating the USD/JPY from a retest of October lows. As for the topside, the USD/JPY faces multiple downtrend lines along with 11/6 and 11/4 highs.
Present Price: 89.74
Resistances: 89.88, 90.03, 90.27, 90.38, 90.50, 90.64
Supports: 89.61, 89.44, 89.30, 89.15, 88.97, 88.82, 88.73
Psychological: 90, November and October Lows