It just feels like it’s clinging on at the moment, like one of those films were someone is holding someone else by the hand as they dangle off a cliff. Will they be pulled up or fall screaming to smash into a bloody mess below. No, I haven’t got ‘Daylight’ playing on one of my screens for lack of US data.
The June support line is making a fist of containing the falls so far despite little peeps below. The broken May resistance line also marked the low yesterday and we have the 100 mma at 97.76. Even so the September monthly trend has been down and the news both sides of the water hasn’t given the bulls any reason to take it higher.
USD/JPY daily chart 01 10 2013
The US and disappointment over Abe’s extra stimulus package means that the focus is switching to the downside. Even taking the US problems out of the picture I don’t think that there’s much reason to buy at these levels. The data still isn’t strong, and as I’ve been pointing out over the last few days, the employment components of the data have been showing continuing weakness. (written before the ISM figure) So, politically the US is screwed, fundamentally the US is looking screwed, the Abe fireworks after party is over and the heads are down and working hard on the nitty gritty of it all.
All in all there’s not much going for the dollar yet I still don’t feel like selling it. I’d like it lower, as I’ve stated previously, and down near 95 is still my target entry point. There’s also a nice grouping of two 38.2 fib levels from the Oct 2011 lo/hi and the Sep 2012 lo/hi. The Sep comes in at 93.56 while the Oct comes in at 92.97. Below there is the 55 wma at 92.36 so there’s a good band of support down there.
USD/JPY weekly chart 01 10 2013
At the time of writing we’ve had a moderate Markit PMI and a relatively good ISM PMI so we’re seeing a bounce. The proof of the pudding will be to see if it can hold onto the gains or if it will fall back further over the course of the session. A waiting game as always.
