The USD/JPY is contemplating surpassing our 3rd tier downtrend line as U.S. equities selloff and we witness broad-based strength in the Dollar. Britain's surprisingly negative Prelim GDP figure sent shockwaves throughout the FX community, and the Dollar is benefitting as a result. A combination of positive U.S. Q3 earnings and Existing Home Sales data has given investors renewed confidence in the Dollar and the Fed's ability to begin extracting liquidity in 2010. These factors, combined with this week's light Japanese Trade Balance number, have allowed the USD/JPY to extend its gains above the psychological 90 level. However, a lot can change next week since we'll receive more Q3 results and key econ data from the U.S. and Britain beginning Tuesday. Japan will print econ data of its own next week, including Retail Sales on Tuesday, Prelim Industrial Production on Wednesday, and CPI on Thursday. Additionally, the BoJ will make another monetary policy decision late Thursday night/early Friday morning EST. Therefore, it'll be a busy week ahead for the Yen and we will see whether the USD/JPY can build its present rally into a more substantial uptrend.
Technically speaking, the USD/JPY's encounter with our 3rd tier downtrend line is an important development since it runs through 8/28 highs. Our 3rd and 4th tier downtrend lines carry a heavier weight since they represent the USD/JPY's ability to extend its present upward movement towards the psychological 95 level. Besides our downtrend lines, 9/21 highs could serve as a formidable technical barrier should they be reached. That being said, the USD/JPY's topside obstacles are wearing thin, and an accelerated near-term breakout is becoming more probable. As for the downside, the USD/JPY's recent run has created several technical cushions, including multiple uptrend lines along with 10/22, 10/21, and 10/20 lows. Additionally, the highly psychological 90 level is now working in the USD/JPY's favor.
Present Price: 91.90
Resistances: 91.90, 92.03, 92.18, 92.38, 92.51, 92.78
Supports: 91.76, 91.61, 91.48, 91.26, 91.07, 90.79