USD/JPY Daily Commentary for 4.28.09

The USD/JPY has dropped below our previous 1st tier trend line, and this should be a great cause of concern for the bulls.  We could really see the selloff pickup speed today as investors sprint towards the Dollar and Yen for safety from the Swine Flu.  Our previous 1st tier uptrend line and 1st tier downtrend lines are reaching an inflection point today, creating a perfect storm for the USD/JPY. 

The all around strength of the Yen comes despite an extremely negative economic outlook from Japan.  Japan sees industrial production and exports declining 23.4% and 27.6% in the fiscal year vs. previous estimates of 4.8% and 3.2% declines, respectively.  Not to mention Japan foresees a 3.3% drop in GDP and an unemployment rate of 5.2%. 

To make matters worse, Japan expected the CPI to drop much more than expected with deflation taking control of prices.  These are horrible numbers folks, and they show the global economic crisis may be far from over.  One might expect the Dollar to appreciate on the news of the Japanese economy worsening since the currency pair is being priced on the comparative economic performance between the two nations. 

However, investors are showing the estimates from Japan imply the U.S. will have its fair share trouble as well.  The plummeting level of exports only highlights the economic struggles of America. The downtrend seems to be in the driver’s seat right now and we have a negative outlook on the USD/JPY.

Fundamentally, we find resistances of 97.11, 97.98, 98.56, 99.20, and 99.79.  To the downside, we see supports of 96.33, 95.55, 95.04, 94.48, and 93.57.  The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.  The USD/JPY is currently exchanging at 96.15.

USD/JPY Daily Commentary for 4.28.09

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