Japan's trade balance came in below analyst expectations late Wednesday, yet surging U.S. equities trumped the disappointing data point as we anticipated. A recovery in U.S. corporate performance implies greater demand for Japanese exports in the future, weakening the Yen and improving prospects of a global economic recovery. Even though Japan's trade balance was shy of expectations, we're pretty encouraged by the swift recovery over the past two releases from recession lows. The data reveals export prospects are picking up as stimulus packages ultimately prop up demand for Japanese exports. Employment markets in the developed economies are improving along with consumption, bringing life back to the Japanese manufacturing sector. Japan will release more telling data next week, including retail sales, prelim industrial production, household spending, and the Tokyo core CPI. If the S&P futures can base and continue their ascent while Japanese data points outperform, the USD/JPY could have what it takes to crack our 2nd tier uptrend line.
Yesterday's movement propelled the USD/JPY back above the important 1st tier uptrend line. The currency pair is making a stronger bit for a return to safety in the process. However, the USD/JPY is being held down by our 1st tier downtrend line and the psychological 95 level. It appears investors will need more confirmation before committing the necessary funds for the currency pair to take a more substantial step higher. Nevertheless, Thursday's move was encouraging, placing the USD/JPY in a more comfortable territory technically. Meanwhile, our 1st tier downtrend line along with 7/22 and 7/13 lows create a nice immediate-term support system.
Present Price: 94.76
Resistances: 94.99, 95.73, 96.33, 96.77, 97.20
Supports: 94.49, 93.82, 93.28, 92.90, 92.39
Psychological: 95
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