USDJPY forex technical analysis 20 April 2015
A day or so after the March FOMC I turned short term bearish on the dollar, particularly USD/JPY.
For months we had been seeing an economy held up on the jobs numbers while other sectors showed weakness. The switch from the Fed to a data dependant stand point meant that the market could no longer ignore the slowing data seen elsewhere.
In the short period I've been away the data has shown no signs or turning up for the better. Retail sales improved but didn't break the bank. More manufacturing weakness is looking a possibility after the Empire state numbers, and if we get a second bad number for April NFP's then the market could well throw it's toys out the pram.
At the moment the FOMC minutes are the only hawkish factor keeping the dollar afloat and it's kept USD/JPY from sinking too far
Price wise we're still treading water between 118.20/50 and 120.70/121.00 as the market sits in the middle of the data/Fed seesaw. Dip buyers are still around but they're not seeing too much upside for their buying sprees. That is a possible warning sign that we could see a bigger move south.
USDJPY daily chart
Ultimately we need to see a break of 118.00 to get the longs worried and a break of 121.50 to give them some impetus.
Housing, Markit manufacturing and durable goods are the main items on the data front this week, and we'll need to see some strong numbers if we want a crack at the upside. If we see further weakness then we're likely to see the lower 118 levels tested.
I'm sticking to my short term bearish bias for now, purely based on the data, but I'm still of the view that the Fed still very much wants to raise rates as soon as they can. Until they say otherwise it's going to make the downside for the buck hard work
