Key Highlights
- The US Dollar recovered strongly after a sharp decline to 104.45 against the Japanese Yen.
- USD/JPY is facing a strong resistance on the upside near 106.80 and 107.00.
- The US GDP in Q2 2019 (Prelim) increased 2.0%, similar to the market forecast.
- The US Personal Income might rise 0.3% in July 2019, less than the last +0.4%.
USD/JPY Technical Analysis
This past week, the US Dollar failed to break the 106.80 resistance area against the Japanese Yen. The USD/JPY pair declined sharply, traded as low as 104.45, and recently started a strong recovery.
Looking at the 4-hours chart, the pair climbed back above the 105.00 and 105.20 resistance levels. More importantly, there was a break above the 50% Fib retracement level of the downward move from the 106.73 high to 104.45 low.
The pair even traded above the 106.00 resistance and the 100 simple moving average (red, 4-hours). It opened the doors for more gains above the 61.8% Fib retracement level of the downward move from the 106.73 high to 104.45 low.
However, there are many important resistances waiting near the 106.80 and 107.00 levels. If there is a successful break and close above 107.00, the pair could continue to rise towards 107.40 and 108.00.
Conversely, if the pair fails again to climb above 107.00, the bulls could lose control. In the mentioned bearish case, USD/JPY may perhaps trim gains and correct lower towards the 105.50 support area.
Fundamentally, the US Gross Domestic Product annualized reading for Q2 2019 (Prelim) was released by the US Bureau of Economic Analysis. The market was looking for an increase of 2.0%, less than the last 2.1%.
The actual result was similar to the forecast, as the US Gross Domestic Product grew 2.0% in Q2 2019 as per the “second” estimate released by the Bureau of Economic Analysis.
The report added:
The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.1 percent.
Overall, USD/JPY is facing a strong resistance near 107.00, while EUR/USD extended its decline below the 1.1100 support level. On the other hand, GBP/USD is still trading above the 1.2150 support.
Upcoming Economic Releases
- Euro Zone CPI for August 2019 (YoY) (Prelim) – Forecast +1.0%, versus +1.0% previous.
- Euro Zone Core CPI for August 2019 (YoY) (Prelim) – Forecast +1.0%, versus +0.9% previous.
- US Personal Income for July 2019 (MoM) – Forecast +0.3%, versus +0.4% previous.
- Canadian GDP for Q2 2019 (Annualized) – Forecast +3.0%, versus +0.4% previous.
