Another week passed by and a new chapter was written in the hate story between Russia and Ukraine. Of course, all the tensions favored safe haven assets and the Japanese yen appreciated in front of the US dollar pushing it towards 101.33. Throughout the week, the West has warned Russia that it could face economic sanctions if it continues the standoff in Crimea. They did not come to any understanding and in this weekend Crimeans are voting whether to secede from Ukraine.
The macroeconomic data for Japan was rather mixed. The GDP came in line with expectations; consumer confidence still suffers and right now hit a low of 38.3. On the other hand, Core Machinery Orders were almost double than the forecasted value and BSI Manufacturing Index was above expectations as well.
Trade Balance (7:50 GTM)-Tuesday. This indicator has a medium impact and it measures the difference in value between imported and exported goods during the reported month. Last month the trade balance was -1.82T and for this month it is expected -0.89T.
All Industries Activity (12:30 GTM)-Wednesday. It is a leading indicator of economic health as businesses are quickly affected by market conditions. It tends to have a muted impact because the service data, which accounts for 60% of total industry activity, is covered in the Tertiary Industry Activity report released about a week earlier.
BoJ Gov Kuroda Speaks (1:00 GTM)-Wednesday. The Governor is due to speak at the International Financial Symposium, hosted by the International Institute for Monetary Affairs in Tokyo. Volatility is often experienced during his speeches as traders attempt to decipher interest rate clues.
Support: 100.75, 99.75
Resistance: 102.80, 103.75
The daily chart shows us how the inconclusive, uncertain movement from the past weeks can turn into a symmetrical triangle. The outcome of the following week is going to be decided by the state of the current geopolitical conflict from Crimea. If they come to terms, USDJPY could rally to the 102.80 level in the first place and even testing the resistance line from 103.75. On the other hand, if the tensions arise again, then the USDJPY will continue its slide towards the psychological level from 100.
Support: 101.20, 100.75, 100
Resistance: 101.90, 102.80, 103.40
The H1 chart is an interesting one as it can develop in both ways, depending on how the geopolitical conflict will fare next week. A falling wedge has been drawn and announces a possibility of an upwards movement if the quotation manages to close above the resistance line from 101.90. Also, it could be just a pause before the bears continue its march towards 100.75 and then the key support line from 100.
Bullish or Bearish
Overall, I reassert the fact that next week’s price action will be given by the outcome of the negotiations between Russia and the West. A positive answer will benefit the US dollar and the USDJPY will have a good week whereas a continuous state of conflict will benefit the Japanese yen and we could see how USDJPY loses even more ground.