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Talking Points

  • US Dollar rocketed higher against the Japanese Yen, and traded close to 8-year highs.
  • USDJPY found resistance around the $124.50 resistance area, which ignited a downside reaction.
  • Japanese National Consumer Price Index was released by the Statistics Bureau yesterday evening, which posted an increase of 0.6%, lower compared with the last 2.3%.
  • Japanese Industrial Production released by the Ministry of Economy, Trade and Industry increased by 1% in May 2015, compared with the preceding month.

Key Highlights:

Japanese National CPI

Japanese Industrial Production

USDJPY Technical Analysis

The US Dollar managed to pop higher against the Japanese Yen, and once the $122.00 resistance was breached the upside was swift. The USDJPY pair traded as high as $124.44, and currently correcting lower. There appears to be a monster bullish trend line formed on the 4-hours chart of USDJPY, which might act as a support to the pair if it corrects lower from the current levels.

USDJPY - 05.29.2015

An initial support can be seen around the 38.2% Fib retracement level of the last wave from the $121.48 low to $124.44 high. However, the most important support can be seen around the 50% Fib retracement level, which is also positioned around the highlighted bullish trend line.

The 4-hours RSI is moving lower after testing the overbought level, signaling that a minor correction might be on the cards. A break below the stated trend line may negate the bullish view and call for more losses in the near term.

On the upside, a break above the last high of $124.44 could take USDJPY towards $125.00. Any further gains might be dependent on how the greenback trades moving ahead.

Japan National CPI

Earlier during the Asian session, the Japanese National Consumer Price Index, which measures the price movements obtained by comparison of the retail prices of a representative shopping basket of goods and service was released by the Statistics Bureau.

The outcome was lower when matched to the last reading, as the Japanese National Consumer Price Index increased by 0.6% in April 2015, compared with the same month a year ago. At the same time, the Industrial Production report was published. The report mentioned that there was a 1% rise in the Japanese Industrial Production, higher compared with the forecast of 0.8%.

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Article by  Tom Daly,  Academy of Financial Trading

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