As with the rest of the majors the Japanese Yen has seen significant gains on the greenback on the idea that the Fed will be forced to take a more aggressive stance at easing. Latest Retail Sales figures from the US however appears to suggest there is no need for the Fed to panic. Core Retail Sales for June came in at 0.4% well above forecast while the headline number managed to stay flat amidst expectations of a contraction. This to us suggest the scenario of a single rate cut for the year remains intact.
Resistance
- 160.263 – Double Top breakout point
- 159.448 – Intraday Consolidation Ceiling
- 158.856 – Yesterday’s High
Support
- 158.251 – Intraday Consolidation Low
- 157.157 – Monday’s Low
- 156.577 – Daily Consolidation Floor
USDJPY retreated after its knee-jerk response to the strong US Retail Sales data. Still we note that we find ourselves with a daily dragon fly doji from Monday and prices just above the 50D Moving Average. This to us suggests a possible reentry point for reestablishing carry trades. Note that the US economy is far from falling off a cliff and we have retreated significantly from multi-decade highs. Consider buying at market for a pullback to the double top trigger at 160.263. We have no interest at shorting USDJPY absent any real catalyst for bears.
