USD/JPY: Trading the US CB Consumer Confidence Index

Here are all the details, and 5 possible outcomes for USD/JPY.

Published on Tuesday at 14:00 GMT.

Indicator Background

The CB Consumer Confidence Index provides  important readings about consumer confidence and spending, which are critical for economic growth.The index’s readings   are carefully  reviewed by analysts and traders looking for clues as to  which direction the economy is headed.

The indicator fell in April to 69.2 points, which was below the market forecast of  69.9.   The forecast for  May  calls for little change, with a  prediction of 69.6.

Sentiments and levels

Japanese indicators remain weak, such as recent CPI and All  Industries  Activity releases.  The recent surge by the US dollar, together with the desire of Japan for a weaker yen and the  improving US economy balance the safe haven flows caused by the growing turmoil in Europe. A bit more stability could push the  USD/JPY higher. More worries from Spain  can’t really push it much lower.    So, the overall sentiment is bullish  on USD/JPY towards this release.

Another note: USD/JPY so far justifies its title as the most predictable currency pair for Q2.

Technical levels, from top to bottom: 80.20, 80, 79.60, 79, 78.30, and 77.50.

5 Scenarios    

1. Within expectations: 65.6 to 74.0: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 74.1 to 78.0: An unexpected higher reading can send USD/JPY above one resistance level.
3. Well above expectations: Above 78.0: A sharp increase in consumer confidence could propel the pair above two or more resistance levels.
4. Below expectations: 61.5 to 65.5: A reading lower than forecast could send USD/JPY below one support level.
5. Well below expectations: Below 61.5:   An unexpected weak reading would  could  push the pair  below two or more support levels.

For more on USD/JPY, see the USD/JPY forecast.