The USD/JPY is wrestling with the almighty 100 level again today after briefly dropping below. The USD/JPY strengthened slightly after Japan released a better than excepted trade balance. However, the optimism is faint since a record decline in imports is responsible for the improvement.

Therefore, consumers are tightening their budgets as the economic downturn picks up steam. Japan continues to be the hardest hit in the global economic crisis. Export demand has been cut in half with consumers world-wide losing their taste for durable goods.

Though the recent rally in the USD/JPY does provide some relief for the Japanese economy, the currency pair is still trading 20% below June 2007 levels. However, a stabilizing American economy could help push the USD/JPY higher since the currency pair is being valued by the comparative performance of both economies.

That being said, the USD/JPY has three more downtrend lines to push through before it can yield substantial gains. 100 will continue to be a battle zone as U. S. equities struggle with their own demons. If U. S. equities make another leg down, we would not be surprised to see the USD/JPY follow suit.

Japan will release Core Machinery Orders tonight. The data is forward looking since corporate capital expenditure normally signifies expansion. Analysts are expecting a decline of -6.8%. Fundamentally, our 100.28 support turns resistance while we maintain our resistances of 100.71, 101.44, 101.98, and 102.50.

To the downside, we hold our supports of 99.79, 99.06, 98.16, and 97.59 with fresh bottom-end resting at 97.11. The USD/JPY is currently exchanging at 99.99.

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