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USD/JPY Poised to Break Higher; Positive Momentum Increases

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The USDJPY tested 121.60 as the dollar continued to gain momentum against most major currencies.  The yen strengthened against the Euro which continues to experience outflows as the ECB initiates its QE program.  Japanese core machine orders dropped which PPI remained unchanged.

Japan PPI was unchanged in February, after falling 1.3% in January. This breaks a string of four consecutive months of price declines. Export prices dipped 0.8% last month after falling 1.6% in January. Import prices dropped 4.9%, the same as in January. On an annual basis, producer prices picked up to a 0.5% year over year clip, from 0.3% year over year previously. However, the annual gains are modest and the small back-to-back gains follow a string of declines since March 2012.

Japan core machine orders dropped 1.7% in January, a smaller decline than expected, after climbing 8.3% in December. But on a year over year basis, orders excluding utilities and shipments slowed to a 1.9% year over year clip from 11.4% previously, after contracting in November and October. Total orders surged 14.2% in January, almost doubling the 8.6% December rebound, with private orders rising 10.7% following a 17.5% gain previously. Public orders surged 24.2%, rebounding from December’s 6.9% drop, and in fact was the first increase since August. The mix of data doesn’t provide any clear signs one way or another on the strength of Japan’s recovery or prospects for the future.

The technicals points to a higher USD/JPY.  Momentum has turned positive as the MACD (moving average convergence divergence) index generated a buy signal.  This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread.  The index moved from negative to positive territory confirming the buy signal.

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The post USD/JPY Poised to Break Higher; Positive Momentum Increases appeared first on Forex Circles.

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