The USD/JPY continues to increase on the short term and as the US dollar index edged higher and looks determined to reach fresh new highs, the currency pair is approaching a major dynamic resistance and if will manage to jump and consolidate above this obstacle, then we’ll have a broader rebound. The US dollar index has increased significantly today and is approaching April 22 high, the index has retreated a little in the start of this week, but now has resumed the upward movement, the USDX’s increase is pushing the greenback higher against all its rivals.
The US dollar has received a helping hand from the US economic data in yesterday’s trading session, the USD has retreated a little right after the CPI data was released, but the bulls have taken the full control again. The Consumer Price Index has increased by 0.4% in April, exceeding the 0.3% estimate, has increased much more compared to the 0.1% growth from March. Moreover the Core CPI rose by 0.2% in April, matching expectations, has come better compared to the 0.1% increase from March. Housing Starts indicator has managed to increase from 1.10M to 1.17M, has beaten the 1.12M forecast and has lifted the greenback. The US Capacity Utilization has increased unexpectedly higher, has reached the 75.4% level, has jumped much higher compared to the 75.1% estimate, while the Industrial Production rose by 0.7% in April and has reached the highest level of the last 3-months, the production has exceeded the 0.3% estimate.
The Yen wasn’t impressed by the Japanese Prelim GDP, which has increased by 0.4% in Q1, much more than the 0.1% forecast, the Prelim GDP Price Index rose only by 0.9%, while the prediction was 1.0%. We could have some volatility on this pair tonight after the FOMC Meeting Minutes will be released. Remains to see how the USD will react a
The price is moving toward the median line (ML) of the descending pitchfork, is increasing inside of the short ascending pitchfork, between the median line (ml) and the sliding parallel line (ascending dotted line), the sentiment could change only if the price will jump and stabilize above the median line (ML) of the descending pitchfork. The perspective remains bullish on the short term as long as the price is trading inside of the short pitchfork, the corrective phase may be over if the price will trade much above the 38.2% retracement level, will approach the 23.6% retracement level if will have enough power to take out the dynamic resistance (median line of the descending pitchfork).
The pair will become strongly bullish if will jump and stabilize above the median line (ml) of the short ascending pitchfork, the price is attracted by the confluence area formed at the intersection of the median line (ML) with the minor median line (ml), the rate needs to challenge also the 110.05 horizontal resistance, any jump and consolidation above these levels will attract more buyers, a breakout above the confluence area will open the door for more increase. A short decrease may come if the price will slip and close below the sliding parallel line.