USDJPY has been trending lower recently, moving below a descending trend line connecting the latest highs of price action on the 1-hour chart. Price is currently testing this trend line and might be due for another drop.

The 100 SMA is below the 200 SMA, confirming that the path of least resistance is to the downside and that the selloff is likely to carry on. This moving average is also near the trend line, adding to its strength as a resistance area.

Meanwhile stochastic is heading higher but is nearing the overbought region, indicating weaker buying pressure and a possible return in bearish momentum. RSI is also close to the overbought levels.

The US recently released a bunch of downbeat economic reports, starting from its flash services PMI which indicated industry contraction. New home sales also came in weaker than expected.

For today, the durable goods orders data is due, along with the initial jobless claims report. Another round of weak data could mean more losses for the US dollar. Analysts are expecting to see a 3.0% rebound in headline durable goods orders and a 0.2% uptick in core durable goods orders.

160225_usdjpy 800

As for the yen, Japan’s Tokyo core CPI and national core CPI figures are up for release next. Weak readings could revive talks of additional BOJ easing, which might also weigh on the yen. Analysts are expecting to see a flat reading for the Tokyo core CPI and a 0.2% decline for the national core CPI.

One thought on “USDJPY Descending Trend Line (Feb 25, 2016)”

  1. Ryan Gandalf van Jaarsveld says:

    Thank you Kate – USDJPY touching 21 EMA on H4 – supports the above analysis. I would think that negative news for US should mean further JPY strength due to risk off sentiment. With the release of yesterday’s PMI and new home sales we did see the pair continue to fall. I also note some weakness in JPY over night with EURJPY and GBPJPY both being at 21 EMA on H4. Bad US news would explain why EURJPY rose seeing as EURUSD also rose though GBPUSD remained flat so my feeling is that there was some weakness for JPY last night signalling risk on sentiment – perhaps linked to the increase in the oil price after release of US DOE Crude Oil Inventories?

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