The June Japanese Yen is trading about .38% lower this morning in New York after a weak Asian trading session. Early during Thursday’s trading session, data showed that Japan’s economy contracted more than expected due to the effects of the March earthquake, tsunami and subsequent nuclear problems.
Today’s report showed that Japan’s economy contracted at an annualized 3.7% pace during the January through March time period, almost double what economists had forecast. The drop in GDP pushed Japan back into a recession.
After an early hesitation which led some traders to believe the weak number had already been factored into the market, the Dollar moved solidly higher against the Yen by the close of the Asian trading session. This strength carried over to the New York session where the Yen pressured new session lows.
Technically, the June Japanese Yen recently completed a little more than a .618 retracement of the 1.2957 to 1.1697 range. The .618 level was at 1.2476 with the market top at 1.2570.
The short-term range is 1.1697 to 1.2570. This range creates a retracement zone at 1.2134 to 1.2030. Currently the Japanese Yen is heading toward this area while walking down a downtrending Gann angle from the 1.2957 top at 1.2407 today.
An uptrending Gann angle from the 1.2957 bottom is at 1.2072 today. The speed of this angle suggests that the 50% target at 1.2030 is likely to be reached within the next 4 to 5 trading sessions.
The combination of the fundamental and technical factors suggest continued downside pressure over the short-term until the market, at a minimum, completes a 50% retracement of its recent rally from 1.1697 to 1.2570 at 1.2134.
