The USD/JPY registered a remarkable drop and is somehow expected to hit new lows in the upcoming week, is trading in the red and has deleted the yesterday’s minor gains. Technically is somehow expected to drop much deeper on the short term after the retest of some resistance levels, but we need a confirmation that we’ll have a larger drop.
Price has dropped even if the US dollar index has managed to erase the morning gains and looks determined to resume the yesterday’s bullish candle, the index has found strong support at a dynamic obstacle and is struggling to bounce back, will approach the 97.58 static resistance, only a valid breakout above this level will confirm a further increase. The dollar will increase again only if the dollar index will increase further, but is premature to say that we’ll see a larger rebound on the USDX as long as is located below the 97.58 resistance.
The Yen has increased today as the Nikkei stock index has edged lower aggressively, failing to stay above the 19700 broken static resistance level, will drop further if will close the week below this level. The JP225 could drop after the failure to approach and reach the 20020 previous high.
The Japanese Yen has increased significantly versus all its rivals even if the economic data have come in mixed, the National Core CPI rose only by 0.3%, less versus the 0.4% estimate, while the Tokyo Core CPI increased by 0.1%, more versus the 0.0% forecast. Moreover the SPPI surged only by 0.7% in April, has come less versus the 0.9% estimate and versus the 0.8% growth in the previous reading period.
The USD/JPY has squeezed a little in the last hours, even if the economic data have come in mixed, the US Prelim GDP rose by 1.2% in Q1, beating the 0.9% estimate and versus the 0.7% growth in the former reading period, while the Core Durable Goods Orders dropped by 0.4%, even if the traders have expected to see a 0.4% growth. The Durable Goods Orders dropped only by 0.7%, less versus the 1.4% estimate, while the Prelim GDP Price Index has increased only by 2.2% in Q1, less versus the 2.3% estimate and versus the 2.3% growth in the former reporting period.

USDJPYdaily

Price has dropped after the retest of the lower median line (lml) of the minor ascending pitchfork and the sliding line (descending dotted line), could drop also because has failed to stabilize above the 38.2% retracement level. Has tested the confluence area formed at the intersection between the lower median line (lml) with the sliding parallel line (descending dotted line), was rejected by this area and will drop significantly if will manage to close below the second warning line (WL2) of the former descending pitchfork. The major downside target is at the 38.2% retracement level, will approach this level only if the USDX and the Nikkei will drop deeper.

USDJPYh4

You can see on the H4 chart that the rate has found temporary support on the second warning line (WL2) and now is fighting hard to rebound, we'll have a great selling opportunity only if the rate will make a valid breakdown below the WL2. Right now we don't have a buying opportunity, will become strongly bullish only if will climb and will stabilize inside the ascending pitchfork's body (above the lml).

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