USD/JPY: supported in mixed Tokyo after terrific GDP

USD/JPY is below the 109 handle on the back of upbeat improvements on expectations in both q/q and y/y Q1 GDP.

The preliminary and seasonally adjusted GDP for q/q came in at +0.4% vs the expected +0.1% and was far better than the previous -0.3%, albeit revised to -0.4%. However, for annualized GDP, the preliminary y/y release arrived at 1.7% vs the expected +0.3% and the prior -1.1%. Hence, the Yen was bid. However, disappointing was the deflator y/y, being the inflation reading that the BoJ will be concerned about in respect to their target. This arrived at 0.9%, missing the expected 1.0% and prior 1.5%.

In a mixed Asian open following a negative Wall Street close, stocks are supported on the GDP news and the Yen is back onto the 109 handle.

USD/JPY levels

The key upside level is the 109.89 resistance line for April 19th and 20th business that eventually gave way to the rally to 111.79 last month. USD/JPY has otherwise made a foundation on the downside at the 200 month and 200 week moving averages at 105.86/38. A break of 107.50 to the downside, being the May 4th highs, opens that support line and 2nd May lows. "This area is key support and we continue to look for it to underpin the market. The new low of 105.55 was accompanied by a large divergence of the daily and weekly RSI and this reflects a loss of downside momentum, explained analysts at Commerzbank.