USD/JPY – Slight Losses Ahead of US Housing Numbers

The Japanese yen remains at high levels, as USD/JPY continues to trade in the mid-102 range. In economic news, it’s a quiet day on the release front. Today’s key US event is Existing Home Sales, while there are no Japanese releases on Tuesday.

Japan’s trade deficit ballooned in March, jumping to -1.71 trillion yen, well above the estimate of -1.27 trillion. Besides weighing on the yen, the weak figure has raised speculation that the Bank of Japan may have to step in with further easing, as the economy has softened. Consumer consumption could drop as the recent sales tax hike weighs on consumers, and the BOJ could be forced into action as early as June or July. As well, China has been experiencing a slowdown, which is bad news for Japanese exports.

US releases ended the week on a high note, as employment and manufacturing numbers were strong. The all-important Unemployment Claims was up slightly to 304 thousand, but had no trouble beating the estimate of 316 thousand. With the Federal Reserve planning another trim to its QE program at the end of the month and speculation rising about a possible interest rate increase next year, every employment release is under the market microscope. Meanwhile, the Philly Fed Manufacturing Index soared to 16.6 points, its best showing since September. This was well above the estimate of 9.6 points.

The ongoing crisis in Ukraine hasn’t had much of an effect on the markets until now, but that could quickly change if the charged situation spirals out of control. Russian President Putin has threatened to act on his “right” to invade Ukraine, and has steeply raised the price that Ukraine must pay for its gas supplies. Ukrainian Prime Minister Arseniy Yatsenyuk blasted the move as “economic aggression” and said his country must prepare for a complete cutoff of Russian gas. Meanwhile, US vice-president Joe Biden is in Kiev in a show of support for Ukraine, and the US has said it will increase sanctions if no progress is made in resolving the crisis.

USD/JPY for Tuesday, April 22, 2014

USD/JPY April 22 at 13:10 GMT

USD/JPY 102.50 H: 102.73 L: 102.41

USD/JPY Technical

• USD/JPY has edged lower in Tuesday trade.
• The pair is testing resistance at 102.53, which has seen action for the second straight day. There is stronger resistance at 103.07.
• 101.19 is providing strong support.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.97.
• Above: 102.53, 103.30, 104.17, 105.70 and 106.85.

OANDA’s Open Positions Ratio

USD/JPY ratio is made up of a strong majority of long positions, indicating trader bias towards the dollar moving upwards.

The yen continues to trade at high levels. USD/JPY is showing limited movement in the European session.

USD/JPY Fundamentals

• 13:00 US HPI. Estimate 0.6%.
• 14:00 US Existing Home Sales. Estimate 4.57M.
•  14:00 US Richmond Manufacturing Index. Estimate 0 points.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.