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USDJPY moves higher after better US data but more momentum needed

|Includes: CurrencyShares Japanese Yen Trust ETF (FXY)

The better than expected Richmond Manufacturing Index and New Home Sales data (at least as per the sale pace of 328K vs 319K expectations) has breathed new life into the USDJPY (NYSEARCA:FXY).

  • The price is back above the 200 hour MA at the 81.097 level after holding at the midpoint of the move up from the April 16th low (at 81.027). These levels are now intraday support.
  • The high for the day at the 81.25 is the next target
  • The 100 hour MA at the 81.355 currently will be the another target for the pair.

Looking at the recent activity on the daily chart in the USDJPY, the price correction (that peaked on Friday) held the 38.2% of the move down from the March high (see chart below). That level will ultimately need to be breached to get the bulls more in control.

Better data out of the US would help the cause including a rebound in the Initial Claims on Thursday (expectations 375 vs 386 last week). Before the claims, however, is Durable Goods (-1.7% headline, +0.5% ex transportation are the estimates) and the Fed decision - which could be less positive about the economy. This may not be so positive for the trend in the pair.

Other events include the BOJ's policy meeting on the 27th. The central bank is expected to announce an additional 5 trillion yen in government bond purchases. This should help the pair but the question becomes, is it priced in already.

Stay above the 81.02-09 level today and the upside looks OK but ultimately a break above the 81.35 is needed.