The USD/JPY is struggling to rebound as the rate has found temporary support, the greenback needs a bullish spark to be able to jump higher again. The currency pair has increased a little in the current week after the impressive drop registered on Friday after the Brexit referendum, the USD is fighting hard to recover, but remains to see in the coming hours because the USDX is showing some exhausted signs and could drop again on the short term, the greenback could decrease as well versus its rivals. The Japanese Yen has decreased as the Japanese Retail sales have dropped by 1.9% in May, has reached the lowest level after April 2015 when the retail sales have dropped by 9.7%, the economic indicator has come worse compared to the -1.6% estimate, the Yen could drop much deeper tomorrow if the Prelim Inustrial Production will decrease by 0.1%. Moreover the Housing Starts could increase only by 4.9%, less than the 9.0% in the previous reading period.
The USD needs a helping hand from the US economic data to be able to jump much higher, the United States Personal Spending could increase by 0.4% in May, while the Personal Income could increase by 0.3%, moreover the Core PCE Price Index may increase by 0.2%. Unfortunately the greenback could be punished by the Pending Home Sales data, the economic indicator could decrease by 0.9% in May, could plunge after the 5.1% increase from April, we could have some volatility on the major pair after the US data will be released, so you should be careful because the fundamental factors could drive the prices in the coming hours. Oil price could jump higher again if the United States Crude Oil Inventories will decrease to -2.3 million barrels.

You can notice that the rate is still trading inside the descending pitchfork’s body, the pair has found strong support right above the 50% retracement level and now is struggling to stabilize again inside the descending pitchfork’s body, could increase again on the short term if will have enough energy to consolidate above the 50% retracement level. We’ll have a broader rebound only if the rate will break above the median line of the descending pitchfork, the price is trapped below the median line, you can see that the dynamic resistance has rejected the price several times in the last months. The perspective remains bearish on the short and medium term as long as the price is trading below the median line of the descending pitchfork, the price has failed to stay below the 100 level, signaling that we could have a reversal on the short term.

I’ve drawn an ascending pitchfork on the H4 chart, we’ll have a very good opportunity to go long on this pair if the rate will stabilize above the lower median line of the Weekly descending pitchfork and if will retest the lower median line of the ascending pitchfork, personally I’l prefer if the rate will test the confluence area formed at the intersection of the major lower median line (LML) with the lower median line (lml).

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Olimpiu Tuns

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