The USD/JPY is recovering from earlier losses, rallying from our 1st tier downtrend line.  Though Japan’s Final GDP showed a decline of 3.2%, the number was still better than analyst expectations of a 3.5% decline.

The correlation between the S&P futures and the USD/JPY is all over the place these days as investors contemplate whether to rally the currency pair to the psychological 100 level.  If investors continue to favor the U.S. economy over Japan’s and U.S. equities piece together another rally, we could see new March highs. 

However, the downtrend is still in control of the USD/JPY.  Our 3rd tier downtrend line looms in the distance and there is little motive to send the USD/JPY over 100 right now.  Hence, we could continue to see the currency pair consolidate as investors make up their mind over whether to commit to a U.S. recovery.

Fundamentally, we maintain our 98.25 resistance while we hold our additional resistances of 99.05, 99.96, and 100.69.  To the downside, we maintain our supports of 97.66, 97.22, 96.59 and 95.92.  The USD/JPY is currently exchanging at 97.98.

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