The USD/JPY's bounce is losing momentum due to inadequate buy-side activity. The USD/JPY failed to close above our 1st tier uptrend line and September highs on the 4-hours while our 2nd tier downtrend line hangs in the distance. Investors were acting on oversold conditions, and rightly so. The psychological impact of the DPJ's victory is wearing off and attention should return to economic fundamentals. Movements in the EUR/USD and GBP/USD are constrained by consolidation as investors continue to debate the viability of the global economic recovery. Therefore, the USD/JPY may enter a consolidative phase of its own as investors decide where to take the Dollar. Regardless, there remains a strong downward pressure on the USD/JPY. Ultimately, the USD/JPY's fate will likely depend on the S&P futures. The S&P futures continue to float around 1000 and lack a definite near-term trend. However, once the S&P futures do make a technically significant movement, investors will likely see a comparable response in the USD/JPY, possibly a retracement beneath July lows.
Next week is chalk full of data, including Japan's Core Machinery Orders on Wednesday and Final GDP on Thursday. Investors will also be paying close attention to the wave of Chinese economic data on Thursday since Japan has been relying on China's demand for exports. Investors will also receive key economic data from the U.S. along with a BOE monetary policy decision on Thursday. Hence, next week could be a return to volatility with the summer coming to a close, especially since the EUR/USD and GBP/USD are both experiencing multiple trend line inflection points soon.
Present Price: 92.86
Resistances: 92.97, 93.17, 93.33, 93.44, 93.59
Supports: 92.77, 92.68, 92.55, 92.43, 92.27
Psychological: 90, 95