USDJPY has been on a climb recently but zooming out to the longer-term charts shows that it’s still on a downtrend. Price is moving inside a descending channel pattern on its daily and 4-hour time frame but is in the middle of a correction at the moment.

Using the Fib tool on the latest high and low shows that the 61.8% level coincides with the channel resistance around the 112.50 minor psychological mark. This also lines up with a former support zone, which could hold as resistance.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. Once the selloff resumes, the pair could test the swing low at 108.00 or move down to the channel support. Stochastic is heading south from the overbought zone to show that sellers are in control of price action.

Economic data from Japan came in mixed earlier today as household spending and preliminary industrial production came in weaker than expected while inflation readings were mostly strong. Retail sales also beat expectations with a 2.1% year-over-year gain versus the projected 1.6% increase.

The main event risk for the dollar is the advance GDP release, which might show a slower growth figure of 1.3% compared to the previous period’s 2.1% gain. The price index and employment cost index are likely to influence inflation expectations as well. Chicago PMI and speeches by FOMC members Brainard and Harker are lined up.

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