Key Highlights
The US Dollar climbed higher and broke the 111.00 resistance against the Japanese Yen.
There is a crucial bullish trend line in place with support at 110.60 on the 4-hours chart of USD/JPY.
The US GDP in Q4 2019 grew 2.6% (Prelim), better than the forecast 2.3% forecast.
The US ISM Manufacturing Index for Feb 2019 will be released today, which could decline from 56.6 to 56.2.
USDJPY Technical Analysis
After a downside correction, the US Dollar found support near 110.35 against the Japanese Yen. The USD/JPY pair started a fresh bullish wave and traded above the key 111.00 resistance.
Looking at the 4-hours chart, the pair declined from the 111.23 swing low and traded below the 110.50 support. However, the 110.35 level and the 100 (red) simple moving average (4-hours) acted as a strong support and prevented further losses.
More importantly, there is a crucial bullish trend line in place with support at 110.60. The pair bounced back recently above the 110.60 level and the 76.4% Fib retracement level of the last decline from the 111.23 high to 110.35 low.
The pair even climbed above the 111.00 resistance and the 1.236 Fib extension level of the same wave. Therefore, the pair is likely gain momentum above the 111.50 swing high. The next resistance is close to the 112.00 level, above which the pair could rally towards the 112.20 level.
On the downside, the trend line, the 110.50 support, and the 100 (red) simple moving average (4-hours) hold the key. If there is a downside break below 110.50, the pair could correct lower towards the 110.00 support area.
Fundamentally, the Gross Domestic Product report for Q4 2018 (prelim) was released recently by the US Bureau of Economic Analysis. The market was looking for a 2.3% growth in the GDP, less than the last 3.4%.
The result was better than the forecast the US GDP grew 2.6% (according to the “initial” estimate), which was a lot less than the third quarter GDP (3.4%).
The report added that:
The deceleration in real GDP growth in the fourth quarter reflected decelerations in private inventory investment, PCE, and federal government spending and a downturn in state and local government spending.
The US Dollar gained bids after the release and EUR/USD plus GBP/USD corrected lower. Besides, USD/JPY remains supported on dips and it could rise further towards 112.00.
Economic Releases to Watch Today
- Germany’s Manufacturing PMI for Feb 2019 – Forecast 47.6, versus 47.6 previous.
- Euro Zone Manufacturing PMI Feb 2019 – Forecast 49.2, versus 49.2 previous.
- UK Manufacturing PMI Feb 2019 – Forecast 52.0, versus 52.8 previous.
- Euro Zone CPI for Feb 2019 (YoY, Preliminary) – Forecast +1.5%, versus +1.4% previous.
- Euro Zone CPI for Feb 2019 (MoM, Preliminary) – Forecast +1.1%, versus +1.1% previous.
- US Personal Income for Dec 2018 (MoM) – Forecast +0.4%, versus +0.2% previous.
- US ISM Manufacturing Index for Feb 2019 – Forecast 56.2, versus 56.6 previous
- Canadian Gross Domestic Product for Q4 2018 (Annualized) – Forecast +1.4%, versus 2.0% previous.
