NEW YORK (Forex News Now) – USD/JPY rose +2.2% during last week’s currency market trading, gaining primarily on the back of improvement in the U.S. employment picture and largely in the absence of fresh Japanese economic data.
An intraday analysis of price action seen last week reveals that USD/JPY traded generally higher off of its weekly low of 80.91 seen on Monday to a high point of 83.67 on Friday before then giving back some of its gains to close the week at 83.02.
Technical Outlook for USD/JPY
After USD/JPY failed to make a new low below key support at 80.24, the rate now seems to have begun another corrective wave to the upside from the 80.91 level.
In order for the downside to prevail, a second wave of an impulse lower should not exceed the 84.51 reaction high, but if that level is bested, then Fibonacci projection targets of the initial corrective wave upward from the major 80.24 low up to the more recent 84.51 high of December 15th are 1:1=85.18, 1:1.236 = 86.19, 1:1.5 = 87.32 and 1:1.618 = 87.82.
Nevertheless, the rate continues to trade significantly below its 200-day Moving Average now at 86.58, and the slope of that key indicator continues to be negative, thereby still yielding a bearish medium term outlook for the pair.
Resistance for USD/JPY currently shows up initially in the 83.37-67 region, and then above that in the 84.34/51 region and at 85.38. Support for the rate is seen initially at 82.84, and then below that at 81.99, at 80.91, in the 80.24/52 region just above key psychological support at the 80.00 level, and at the rate’s all time low of 79.75.
Overall, this technical scenario favors selling rallies in USD/JPY while the rate still trades below the 84.51 reaction high seen on December 15th, 2010.
This Week’s Economic Data Calendar for USD/JPY
The fx trading news will now be watching the following chronological list of key data releases for the United States and Japan due out during the coming week of January 10th to the 14th: The likely highlights will be Japanese Core Machinery Orders out on Wednesday, the U.S. PPI numbers scheduled for Thursday, and Friday’s U.S. CPI and Retail Sales data.
Monday, January 10th
U.S. Treasury Currency Report (tentative)
Tuesday, January 11th
FOMC Members Plosser and Kocherlakota talk in Philadelphia and Madison respectively.
Wednesday, January 12th
U.S. Import Prices +1.3% expected +1.3% previous
U.S. Fed’s Beige Book
U.S. Federal Budget Balance -150.4B previous
Jap. Core Machinery Orders +2.2% expected -1.4% previous
Thursday, January 13th
U.S. Trade Balance -41.2B expected -38.7B previous
U.S. PPI +0.8% expected +0.8% previous
U.S. Core PPI +0.2% expected +0.3% previous
U.S. Weekly Initial Jobless Claims +405K expected +409K previous
U.S. Federal Reserve Chairman Bernanke talks in Arlington
Friday, January 14th
U.S. Core Retail Sales +0.7% expected +1.2% previous
U.S. Retail Sales +0.8% expected 0.8% previous
U.S. CPI +0.4% expected +0.1% previous
U.S. Capacity Utilization Rate 75.6% expected 75.2% previous
U.S. Industrial Production +0.5% expected +0.4% previous
U.S. Preliminary Univ. of Mich. Consumer Sentiment 75.6 expected 74.5 previous
U.S. Business Inventories +0.7% expected +0.7% previous