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Yen Remains Consolidated; USDJPY Near-Term Outlook

by on April 22, 2014 4:57 pm BST
 

The Bank of Japan (BoJ) still remains hopeful that their extremely lose monetary policy, coupled with the voracious appetite for higher consumer prices, will amount to continued growth. The yen has remained relatively consolidated over the holiday trade, following a very poor trade balance report. The BoJ does not see the need for further asset purchases and that the economy will remain fruitful.

On Sunday, Japan recorded their 36-consecutive monthly trade deficit, with the balance hovering around all-time lows and the worst deficit ever in the month of March. The crusade to debase the yen has remained one in vain as exports continue to miss expectations. Exports only increased by 1.8 percent, opposed to the 6.5 percent increase expected by economists (wrong, again). Imports rose more than expected, 18.1 percent versus 16.2 percent previously forecasted. The rising need in non-domestic energy sources were evident, as fuel imports seen a 14.6 percent bump higher in March compared to the 4.2 percent increase in February.

japan-balance-of-trade

National consumer price index (CPI) data will be released on Thursday with economists expecting a tick higher from 1.3 percent to 1.4 percent.

Price action has consolidated on the 4H chart with USDJPY remaining closely within 102.35 and 102.65. Support  can be found at 102.42 prior to reaching the lower bounds of the range, while a break could send the pair lower to 102.15. As liquidity died down during the Easter holiday, price action trended sideways through an ascending trend line. There was no clear move that was created with momentum, so the pair could regain it’s upward trajectory. Resistance will be found at 102.88 before testing the key 103 level.

4H Chart of USDJPY

4H Chart of USDJPY