Consumption Is Up, USD/JPY Trading At Support

It has been an active morning on the news front. Led by the release of several high-profile economic metrics, the USD is on the move against many of the majors. The U.S. trading day is still very young, but it appears that the Greenback is gaining the attention of the bulls.

The Metrics Are Out

This morning’s metrics are out and they don’t look too bad. Here is the hard data:

Event                                                                      Actual              Projected

Continuing Jobless Claims (March 16)                1.871M                 1.875M

Initial Jobless Claims (March 23)                          215K                    230K

Core Personal Consumption (YoY, Feb.)              1.6%                      1.6%

As we approach the end of the first quarter of 2018, the economic picture in the U.S. is beginning to shape up. Unemployment rates are going down, likely to fall beneath the 4% benchmark by the end of Q2. Personal consumption is up from the previous release and in line with projections.

Add it all up — the stage is set for gradual tightening by the FED coupled with a strengthening USD for the intermediate-term.

USD/JPY Technicals

In a preview from yesterday, I broke down a key area of support for the USD/JPY on the daily timeframe. These levels have held up thus far and may provide another long entry.

Convergence is a good thing and we have plenty of that on the daily timeframe. As expected, the area between 106.25 – 106.50 has set up as formidable downside support. Here are the levels to watch for the remainder of the session:

• Support(1): Bollinger MP, 106.36
• Support(2): 20 Day EMA, 106.22
• Support(3): Daily SMA, 106.21
• Support(4): 38% Retracement of Current Wave, 106.09

Bottom Line: Price has already tested and rejected support at the Bollinger MP. In the event that we see the yen rally against the USD, I will be going long from the 106.26 level. Using an initial stop at 105.99, this trade produces 27 pips on a 1:1 risk vs reward management plan.