USD/JPY Remains In Downtrend Below 112.00

Key Highlights

• The US Dollar struggled to recover above the 111.40 level and declined against the Japanese Yen.
• There is a crucial bearish trend line in place with resistance at 111.50 on the 4-hours chart of USD/JPY.
• The US Housing Price Index in Oct 2018 increased 0.3% (MoM), more than the last +0.2%.
• Today in the US, the New Home Sales figure will be released, which is forecasted to rise 2.9%.

USDJPY Technical Analysis

The US Dollar started a major downside move from the 113.60 swing high against the Japanese Yen. The USD/JPY pair declined below the key 112.25 support to enter a bearish zone.

Looking at the 4-hours chart, the pair recently declined from the 112.66 high and traded below the 112.25 and 112.00 support levels. The pair even broke the 111.00 support and it is currently well below the 100 simple moving average (red, 4-hours).

The recent swing low was formed at 110.12 before the pair started an upward move. It traded above the 111.00 level, but it struggled to break the 50% fib retracement level of the last decline from the 112.66 high to 110.12 low.

More importantly, there is a crucial bearish trend line in place with resistance at 111.50 on the 4-hours chart of USD/JPY. A successful break above the trend line could push the pair towards the 112.00 resistance zone.

An intermediate resistance is 111.70 and the 61.8% fib retracement level of the last decline from the 112.66 high to 110.12 low. On the downside, an initial support is at 110.15, below which there is a risk of a sharp decline below the 110.00 support in the near term.

Looking at major pairs, EUR/USD and GBP/USD recovered slightly this week, but upsides were limited.

Economic Releases to Watch Today

• German Consumer Price Index for Dec 2018 (Prelim) (YoY) – Forecast +1.9%, versus +2.3% previous.
• German Consumer Price Index for Dec 2018 (Prelim) (MoM) – Forecast +0.3%, versus +0.1% previous.
• US New Home Sales for Nov 2018 (MoM) – Forecast +2.9% versus -8.9% previous.
• US Pending Home Sales for Nov 2018 (YoY) – Forecast -0.7%, versus -2.6% previous.