USD/JPY: A close below 112.87 will unmask our short-term target
Macroeconomic overview
Japan's exports rose in January at a slower pace than the previous month due to a decline in shipments to the U.S. and the Lunar New Year holidays. The trade balance came to a deficit of JPY 1.09 trillion vs. the median estimate for a JPY 636.8 billion deficit.
Exports in January rose 1.3% from the same period a year ago, less than the median market estimate for a 4.7% annual increase and slower than a 5.4% yoy increase in December. It is the second month in a row exports have grown, following 14 straight months of contraction.
Japan's exports to the U.S. fell 6.6% in January from a year ago, due to fewer shipments of auto and electronic parts. Stronger economic growth in the U.S. suggests the decline in Japan's U.S.-bound exports could be temporary, but U.S. President Donald Trump's repeated pledges to pull back from free trade have raised concerns that protectionism will spread.
Exports to China, Japan's largest trading partner, rose 3.1% yoy in January, slower than a 12.4% annual increase in the previous month as factories slowed production before the Lunar New Year holidays.
Imports rose 8.5% in the year to January, faster than the median estimate for a 4.7% annual increase. That marked the first increase in more than two years due to a surge in imports of crude oil from Saudi Arabia and coal from Australia, the data showed.
The JPY weakened slightly after weaker-than-expected trade balance data.
Technical analysis
Long upper shadow on Wednesday’s candlestick line weighs heavily on the USD/JPY, adds to the underlying downside tilt. The USD/JPY broke 112.87 on Friday (61.8% retrace of 111.59-114.95 rise), but failed to register a daily below. A close below this level will open the way to 112.00.
Trading strategy
We keep our short taken at 114.20 for the short-term target of 112.00. Long-term outlook remains bearish.
GrowthAces.com - Daily Forex Trading Strategies
Japan's exports rose in January at a slower pace than the previous month due to a decline in shipments to the U.S. and the Lunar New Year holidays. The trade balance came to a deficit of JPY 1.09 trillion vs. the median estimate for a JPY 636.8 billion deficit.
Exports in January rose 1.3% from the same period a year ago, less than the median market estimate for a 4.7% annual increase and slower than a 5.4% yoy increase in December. It is the second month in a row exports have grown, following 14 straight months of contraction.
Japan's exports to the U.S. fell 6.6% in January from a year ago, due to fewer shipments of auto and electronic parts. Stronger economic growth in the U.S. suggests the decline in Japan's U.S.-bound exports could be temporary, but U.S. President Donald Trump's repeated pledges to pull back from free trade have raised concerns that protectionism will spread.
Exports to China, Japan's largest trading partner, rose 3.1% yoy in January, slower than a 12.4% annual increase in the previous month as factories slowed production before the Lunar New Year holidays.
Imports rose 8.5% in the year to January, faster than the median estimate for a 4.7% annual increase. That marked the first increase in more than two years due to a surge in imports of crude oil from Saudi Arabia and coal from Australia, the data showed.
The JPY weakened slightly after weaker-than-expected trade balance data.
Technical analysis
Long upper shadow on Wednesday’s candlestick line weighs heavily on the USD/JPY, adds to the underlying downside tilt. The USD/JPY broke 112.87 on Friday (61.8% retrace of 111.59-114.95 rise), but failed to register a daily below. A close below this level will open the way to 112.00.
Trading strategy
We keep our short taken at 114.20 for the short-term target of 112.00. Long-term outlook remains bearish.
GrowthAces.com - Daily Forex Trading Strategies
