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Strong US Retail Sales - A look at USD/JPY

US Retail sales in March grew 1.1%, up from an upwardly revised 0.7% in February, and beating forecast of 0.8%. This is also the biggest gain since Sept. 2012. Core retail sales, which exclude auto sales, came in at 0.7%, up from the previous reading of 0.3%, and beating the 0.5% forecast.


The historic graph of retail sales show a rebound since the winter months. 
Let's take a look at USD/JPY's reaction.

(usdjpy 1h chart, 4/14)

The USD/JPY is finding support after last week's drop from 104.12 to 101.31. The USD/JPY was already drifting up since the start of this week's trading, and the Retail Sales data gave it another nudge. 

The stochastic in the 1H chart is in overbought area, and the 1H RSI is approaching O/B area as well. The reaction to the positive US data seems to be limited.

Only a break above 102.15 will be seen as a successful price bottom attempt.

The USD/JPY has been to work in a price bottom since 4/10 last week.

If there is support in the 101.50-101.70 area, the price bottom scenario is still developing. Otherwise, last week's bearish momentum will remain the dominant force. A break below 101.30 extends the bearish outlook with 101.20 then 100.75 as the next support pivots.