USD/JPY Pops on Strong U.S. Data Set

By Fast Brokers – The USD/JPY has popped past 1/22 highs in reaction to stronger than expected U.S. GDP, Chicago PMI, and Revised UoM data.  The altogether positive U.S. data set has resulted in broad-based Dollar strength and the USD/JPY is certainly partaking in the action.  The encouraging U.S. data comes in the wake of mixed econ data from Japan during today’s Asia trading session.  Although Household Spending came in hotter than expected, both the Tokyo Core CPI and Prelim Industrial Production printed below analyst expectations.  Hence, we can deduce that a stronger Yen has dragged prices lower, spurring consumption and decreasing demand for Japanese goods.  The key element of today’s data set is the decline in CPI to -2%.  Both the BoJ and DPJ have been vocal about combating deflationary pressures.  Hence, should deflation persist the BoJ may be inclined to take action, and it seems the USD/JPY is already pricing in this realization today.  Meanwhile, it will be interesting to see how the session plays out considering how volatile it has been thus far.  China will kick off next week by releasing Manufacturing PMI.  China’s economic performance has a large impact on Japan considering their close commercial relationship.  Hence, activity in the Yen could remain at a heightened state as next week’s trading session begins.

Technically speaking, the USD/JPY has multiple uptrend lines serving as technical cushions along with 1/19 and 1/22 lows.  As for the topside, the USD/JPY faces multiple downtrend lines along with intraday and 1/20 highs.  Furthermore, the .90 area could continue to have a psychological influence on the USD/JPY over the near-term should the USD/JPY’s upward momentum cool down as the session progresses.

Present Price: 90.74

Resistances: 90.75, 90.90, 91.05, 91.24, 91.43, 91.57

Supports: 90.57, 90.43, 90.27, 90.10, 89.90, 89.72

Psychological: 90, January highs and lows

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