USD/JPY Slides with Disappointing Core Durable Goods Orders

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USD/JPY Slides with Disappointing Core Durable Goods Orders

The USD has been on the fence recently along with soft US data, which have pushed the schedule of a rate hike for the FOMC. USD/JPY has remained in its muti-month consolidation range. Today, we got another disappointing data point in durable goods orders. Let’s take a look at the data and follow up on the USDJPY.

US Durable Goods Order m/m (March): 4.0%
Forecast: 0.7%
Previous: -1.1% (revised from -1.4%)
Core US Durable Goods Orders m/m (March): -0.2%
Forecast: 0.2%
Previous: -0.6% (revised from -0.4%)
UScoredurablegoodsmarch
(click to enlarge; source: forexfactory.com)

The main thing to note in the durable goods order data is that it is volatile because aircraft orders fluctuate. In March, non-military aircraft orders was the main reason the headline number was positive and above the average forecast.

However, the core reading was negative and disappointed, reflecting a trend we started to see at the end of 2014, as the chart above shows. The component, orders for business equipment for example, fell in March for the 7th straight month. This reflects slowing business investment.

The weak core durable goods orders print was a drag on the greenback and the USD/JPY fell.

USD/JPY 1H Chart 4/24
usdjpy1h04242015
(click to enlarge)

The 1H chart shows that after a rally earlier in the week, price stalled below 120.10 and retreated back below 120 b mid-week. This shos a lack of bullish strength. We saw a price top and then a pullback ahead of today’s US data. Then, after the durable goods print, USD/JPY confirmed the price top and is poised to head towards the 118.52 low from last week.

USD/JPY Daily Chart 4/24
usdjpydailychart04242015
(Click to enlarge)

When we look at the daily, chart, we can see that as price approaches the 118.52 low, or lower towards 118, USD/JPY would be testing the central pivot area of its multi-month consolidation range. So, if price can hold above 118, there is still a bullish bias for the medium-term. However, a break below 118 would suggest further consolidation, with a slight bearish bias towards the range lows around 115.56.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.