Yen Consolidates Post Production Report

Key Highlights

• Japanese yen was seen consolidating against major currencies after the industrial production report.

• Japanese Industrial Production released by the Ministry of Economy, Trade and Industry posted a decline of 3.4% in February 2014, which is lower than the last gain of 3.7%.

• USDJPY trading above the all-important 119.00 support area where sellers might struggle if the pair moves lower.

Japanese Industrial Production

Earlier today, the Japanese Industrial Production, which gauges the outputs of the Japanese factories and mines and is a major indicator of strength in the manufacturing sector was released by the Ministry of Economy, Trade and Industry. The outcome was on the disappointing side, as the Japanese industrial production registered a decline of 3.4% in February 2014, which was negative when compared to the preceding increase of 3.7%.

Technical Analysis

The US dollar buyers continued to gain strength against the Japanese yen, but every time the USDJPY pair trades higher it finds sellers. There is a critical bearish trend line formed on the hourly chart of the USDJPY pair, which is acting as a resistance for the pair on the upside. Moreover, the 100 hour simple moving average is also aligned around with the same trend line.

Furthermore, the 38.2% fib retracement level of the last leg from the 121.17 high to 118.31 low is also positioned just above the highlighted trend line. So, we might say that there is a major barrier forming around the 119.40 area where the US dollar buyers might struggle and the pair could find it tough to break higher as long as the trend line is intact. Only a break and close above the same might take the pair towards the 50% fib retracement level.