Key Highlights
- The US Dollar declined sharply after trading above 113.00 against the Japanese Yen.
- There was a break below a major bullish trend line with support at 111.50 on the 4-hours chart of USD/JPY.
- The US Initial Jobless Claims for the week ending July 21, 2018 increased to 217K.
- Today, the US Gross Domestic Product for Q2 2018 (Prelim) will be released, which is forecasted to increase 4.1%.
USDJPY Technical Analysis
The US Dollar was in a major uptrend before it faced a strong barrier near 113.00-113.10 against the Japanese Yen. The USD/JPY pair declined sharply and broke the 112.00 support area.
Looking at the 4-hours chart, the pair fell below the 112.40 and 112.00 support levels. During the decline, the pair broke a major bullish trend line with support at 111.50. The pair dipped below the 50% Fibonacci retracement level of the last wave from the 109.36 low to 113.17 high.
Moreover, there was a close below the 111.80 pivot level and the 100 simple moving average (red, 4-hours). However, the decline found support near the 110.60 level and the 61.8% Fibonacci retracement level of the last wave from the 109.36 low to 113.17 high.
On the downside, the next key support is around the 110.25 level, below which, the pair could trade towards the 110.00 level. On the upside, the previous support near 111.60/80 and the 100 SMA are likely to act as a resistances.
Only a successful close above the 111.80 and 112.00 resistance levels may perhaps initiate a fresh upward wave.
Recently in the US, the Initial Jobless Claims figure for the week ending July 21, 2018 was released by the US Department of Labor. The market was looking for a rise from 207K to 215K.
However, the actual result was on the lower side as there was a rise in claims to 217K. Moreover, the last reading was revised up to 208K. The report added that:
The 4-week moving average was 218,000, a decrease of 2,750 from the previous week’s revised average. The previous week’s average was revised up by 250 from 220,500 to 220,750.
The US Dollar started a short-term recovery due to the oversold conditions. However, downsides in EUR/USD and GBP/USD may possibly be limited.
Economic Releases to Watch Today
- US Gross Domestic Product Q2 2018 (Preliminary) – Forecast 4.1% versus previous 2.0%.
- US Personal Consumption Expenditures Prices for Q2 2018 (QoQ) (Prelim) – Forecast +2.0, versus +2.5% previous.
- US Core Personal Consumption Expenditures for Q2 2018 (QoQ) (Prelim) – Forecast +2.2%, versus +2.3% previous.
