USD/JPY May Find Support As Investors Find U.S. Attractive
The USD/JPY has sharply reversed after breaking below 92.00 for a consecutive data. The lack of conviction to the downside has encouraged a long position. I am taking a cautious approach at this time and will wait for a move above the 20-Day SMA at 93.26 to build upon the position. Strong TIC data today shows that foreign investors are looking to the U.S. as an attractive place to put their money as it has better growth prospects than Europe and also provides a level of safety should the debt issues becomes a broader contagion. That should at least provide an underlining level of support. Inflation data on the week could raise the outlook for U.S. interest rates with consumer prices forecasted to accelerate. However, weak manufacturing data from the NY region could be a sign that the inventory cycle boost to growth is dissipating which could lower growth forecast and generate risk aversion sentiment.
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