USD/JPY – Yen Pressing on Greenback Ahead of Japanese Trade Balance

The Japanese yen is stable on Tuesday, as USD/JPY trades in the high-106 range in the European session. In Japan, All Industries Activities posted another decline, coming in at -0.1%. Later in the day, we’ll get a look at Trade Balance. Little change is expected from the previous release of -0.91 trillion yen. In the US, the only event on the calendar is Existing Homes Sales. The markets are expecting the indicator to improve in the September release.

On Monday, BoJ Governor Haruhiko Kuroda stated that Japan’s economy continues to improve modestly, although consumer demand has lessened since the consumption tax hike in April. The BoJ would prefer to stay on the sidelines, but there has been talk that the central bank could step in with additional stimulus if the economy takes a turn for the worse. Such a move would weigh on the already weak Japanese yen.

US releases wrapped up the week on a high note, as UoM Consumer Sentiment climbed to 86.4 points, its highest reading since July 2007. The markets had expected a reading of 84.3 points. This indicates that the US consumer remains optimistic about the economy and is not overly concerned about warnings of a global slowdown. On the housing front, Building Permits and Housing Starts met expectations. Strong US employment numbers continue to drive the US recovery, as US job claims dropped to 264 thousand, marking a 14-year low. The estimate stood at 286 thousand.

USD/JPY for Tuesday, October 21, 2014

USD/JPY October 21 at 11:25 GMT

USD/JPY 106.80 H: 106.92 L: 106.25

USD/JPY Technical

• USD/JPY moved lower in the Asian session but has recovered in European trade.
• On the upside, 106.85 was breached earlier and remains under pressure. 107.68 is stronger.
• 105.44 is providing strong support.
• Current range: 105.44 to 106.85

Further levels in both directions:

• Below: 105.44, 104.68, 103.19 and 102.13
• Above: 106.85, 107.68, 108.58, 109.82 and 110.68

OANDA’s Open Positions Ratio

USD/JPY ratio is showing slight gains in short positions on Tuesday. This is consistent with the pair’s movement, as the yen has posted slight gains against the dollar. The ratio has a majority of long positions, indicative of trader bias towards the dollar reversing direction and moving higher.

USD/JPY Fundamentals

• 4:30 Japanese All Industries Activity. Estimate -0.3%. Actual -0.1%.
• 14:00 US Existing Home Sales. Estimate 5.11M.
• 23:50 Japanese Trade Balance. Estimate -0.91T.

*Key releases are highlighted in bold

*All release times are GMT

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