The currency pair has dropped in the morning and has touched new lows, but the bulls have involved and have pushed the rate higher. Has found temporary support and now is fighting hard to recover after the yesterday’s impressive drop, the perspective remains bearish on the Daily chart despite the minor rebound.
Price is under selling pressure and could drop much deeper in the upcoming period because has failed to stabilize above some important support levels (the support levels have turned into resistance), personally I still believe that will approach and reach the 106.50 psychological level in the upcoming weeks after the failure to stay above the 114.00 psychological level.
The greenback has managed to drag the pair higher as the USDX has managed to rebound today, is very important what will happen on the dollar index in the upcoming period because is under pressure and could drop much deeper, may be attracted by a dynamic support level. A reversal sign could come on the USDX only if the rate will start to make higher lows.
The Yen has lost ground today as the Nikkei stock index has managed to increase after the yesterday’s impressive sell-off, the index has plunged, failing to stabilize above the 20058 broken static resistance, now could come back to retest this obstacle and a dynamic resistance before will drop much deeper.
We had a poor economic calendar today, the pair was driven by the technical factors, the Japanese Leading Indicator was reported at 104.05%, higher versus the 104.4% estimate, but lower versus the 105.7% in the previous reading period. On the other hand, the US could slip lower again because the Consumer Credit dropped from 19.5B to 8.2B, has come much below the 15.2B estimate, the Crude Oil Inventories were released as well, but didn’t have any significant impact.
Remains to see how the Yen will react in the early morning as Japan will release some important data, such as the Final GDP, Current Account or the Final GDP Price Index.

USDJPYdaily-1

Price has increased after the false breakdown below the 50% Fibonacci line, could come only to retest the second warning line (WL2) of the major descending pitchfork before will drop much deeper in the upcoming period. I want to remind you that the next major downside target will be at the 38.2% retracement level, we could have a selling opportunity if the rate will close below the 50% retracement level. Technically is expected to drop much deeper after the breakdown from the ascending pitchfork, has retested the lower median line (lml) and the 38.2% retracement level and now should slide further. Another leg higher could come only if the rate will climb and will stabilize above the WL2 and above the sliding line (descending dotted line), this scenario is unlikely right now, personally I believe that only the fundamental factors could force the pair to start a larger increase.

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