USDJPY Stalls On G7 Headlines

Picture of Japanese Yen and US Dollars
USDJPY can't break through resistance at 110.50 due to a strong JPY trade surplus announcement and lack of headlines from the G7

Yen bulls did not receive the headlines they wanted to extend gains in USDJPY. The pair dropped in early trading Monday from 110.20 down to 109.383.

The Yen strengthen after April’s Trade Balance was announced which had a surplus close to doubled the forecast of ¥493B.

Time Cur. Imp. Event Actual Forecast Previous
Sunday, May 22, 2016
19:50   JPY Adjusted Trade Balance 0.43T 0.27T 0.30T
19:50   JPY Exports (YoY) (Apr) -10.1% -10.0% -6.8%
19:50   JPY Trade Balance (Apr) 824B 493B 755B

The G7 was contentious but the Japanese Finance Minister tried to hold his ground on the need to prevent large swings in JPY while promoting inflation and economic growth within Japan.

Easing still seems to be on the agenda of Japanese leaders as Abe finalizes the fiscal package for the upcoming year. The Diet approved Earthquake relief measures last week and the tension between Sec. Lew and Finance Minister Aso during the G7 meetings is an indication that the Japanese leader informed the US Treasury Secretary of its plans to increase liquidity later in the year.

USDJPY is currently trading at support of 109.40 and if this level holds will likely run back up and test the highs around 110.5. The next few weeks will be important for the pair.  If a plan is announced by Japanese leaders then the critical point of 112 will be tested and if that’s broken price could jump to 120 within the next 3 to 4 months.

ForexDisco covered it’s USDJPY long last night at 109.79 and booked a 300 pip profit.  It is looking to reenter the trade during the next week if price falls to a better support level around 108.25.

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