USD/JPY and JPY Pairs, May 19 2013


USD/JPY Weekly Close: 103.22 (+1.54%)
Weekly High/Lows for:

USD/JPY 103.31/101.26
EUR/JPY 132.78/131.18
GBP/JPY 156.78/154.97
AUD/JPY 102.04/101.91
CAD/JPY 100.45/99.38

USD/JPY Weekly Pivots: S3: 99.83; S2: 100.55; S1: 101.88; P: 102.60; R1: 103.93; R2: 104.65; R3: 105.98

USD/JPY and JPY PAIRS: USD/JPY surged 1.54% last week, while all of the JPY pairs held steady. This was due to the fact that the Dollar rally was broad-based, further fueled by Friday’s U of Michigan Confidence survey which printed a much higher consumer sentiment number than was forecast by analysts. Five minutes later US Leading Indicators also printed a stronger number than expected, so both releases pointed to continued growth in the US economy. The financial market trends of last week continued this week, with global equities closing higher, the dollars moving higher, gold dropping, and interest rates on bonds moving up slightly. In the equity markets, the Dow, S&P, FTSE 100, DAX, and the Nikkei all closed higher this week. In the currency markets, the USD moved up against all of the majors – JPY, AUD, NZD, CAD, GBP and EUR. Gold had a major move down, closing down $94 from the weekly high of $1,449 to the weekly low of $1,355, as investors are now moving back into the Dollar for safe haven status instead of Gold. With the drop in Gold, the AUD/USD dropped 3% on the week from a weekly high of 1.0017 to a weekly low of .9711. These trends should continue, and new positions should be taken on market setbacks or corrections, but not at current levels.

Moving to the technicals, we are following the USD/JPY and the EUR/JPY again this week. The USD/JPY is very close to meeting its target of 105.60, the 61.8% retracement of the entire swing move down. If we measure the wave 5 target, 100% of wave 1 is 104.35 and 161.8% of wave 1 is 105.89 so we see resistance between 104.35 and 105.89, a likely area for the USD/JPY to pause and retrace. On the accompanying EUR/JPY chart, the wave 5 target measures 134.37 to 138.89, but given the broad-based dollar buying, the JPY pairs have lost momentum, including the EUR/JPY. Once the EUR/JPY reaches its wave 5 target, we can expect a nice correction down in this pair too.

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