The USD/JPY is recovering rather well from yesterday's lows as the currency pair benefits from an improvement in the risk trade. The USD/JPY is moving back towards Wednesday highs as investors await tomorrow's key data releases from China and the U.S. China will print a set of key data during tomorrow's Asia trading session, including Industrial Production and Trade Balance figures. Continual improvement in China's economic performance could give a much needed boost to the risk trade. Yen investors will be paying particularly close attention to China's data since it is Japan's top trading partner. Afterwards, investors will be honing in on U.S. Retail Sales and UoM Consumer Sentiment data. Since U.S. employment data took a turn for the better last Friday, investors will be watching to see if the uptick in employment resulted in greater consumption. However, it will be interesting to see what impact tomorrow's U.S. econ data has on the Dollar should it print positively. Last Friday the Greenback underwent a large wave of appreciation in reaction to the employment data as investors speculated that the Fed may raise rates sooner than expected. Therefore, investors should monitor the Dollar's reaction to tomorrow's data releases carefully.
Technically speaking, the USD/JPY is still trading well below its highly psychological 90 level despite last Friday's pop above. Therefore, the currency pair still has its fair share of topside technicals to deal with before creating a more solid uptrend. That being said, longer-term downtrend forces remain. As for the downside, the USD/JPY is presently testing the patience of our 3rd and 4th tier uptrend lines along. However, the USD/JPY does have additional technical cushions waiting nearby in the form of 11/25 and 12/01 lows. Should conditions deteriorate further, the USD/JPY has our 1st and 2nd tier uptrend lines serving as supports along with November lows and the psychological 85 level.
Present Price: 88.33
Resistances: 88.33, 88.48, 88.67, 88.86, 89.12, 89.41
Supports: 88.07, 87.82, 87.66, 87.50, 87.32, 87.11
Psychological: 90, December Highs and Lows
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