Key Highlights
- The US Dollar is in a positive zone and recently climbed above 108.00 against the Japanese Yen.
- A crucial bullish trend line is forming with support near 107.25 on the 4-hours chart of USD/JPY.
- The US CPI increased 0.1% in August 2019 (MoM), less than the last 0.3%.
- The US Retail Sales might rise 0.2% in August 2019, less than the last +0.7%.
USD/JPY Technical Analysis
The US Dollar started a strong rise from the 106.00 support area against the Japanese Yen. The USD/JPY pair broke the key 107.00 and 107.20 resistance levels to move into a positive zone.
Looking at the 4-hours chart, the pair settled above the 107.50 level and the 100 simple moving average (red, 4-hours). Finally, there was a break above the 108.00 level and a new monthly high was formed.
If there is a downside correction, the pair could find bids near the 107.60 level or the 23.6% Fib retracement level of the last wave from the 105.73 low to 108.25 swing high. However, the main support is near the 107.20 level.
Moreover, there is a crucial bullish trend line forming with support near 107.25 on the same chart. If there is a break below the trend line, the pair could test the 106.60 support and the 100 SMA.
On the upside, there is a major resistance near the 108.50 and 108.80 levels. Overall, USD/JPY is showing positive signs and it could continue to rise towards the 108.80 levels.
Fundamentally, the US Consumer Price Index for August 2019 was released by the Bureau of Labor statistics, Department of Labor. The market was looking for a 1.8% rise in the CPI compared with the same month a year ago.
The actual result was lower than the forecast, as the US CPI increased 1.7% in August 2019 (YoY). Looking at the monthly change, there was a 0.1% rise, similar to the forecast and less than the last +0.3%.
The report added:
Increases in the indexes for shelter and medical care were the major factors in the seasonally adjusted all items monthly increase, outweighing a decline in the energy index. The energy index fell 1.9 percent in August as the gasoline index declined 3.5 percent. The food index was unchanged for the third month in a row.
Both EUR/USD and GBP/USD bounced sharply after the release and likely to extend gains in the short term.
Upcoming Economic Releases
- US Retail Sales August 2019 (MoM) – Forecast +0.2%, versus +0.7% previous.
- US Import Price Index August 2019 (MoM) – Forecast -0.4%, versus +0.2% previous.
- US Export Price Index August 2019 (MoM) – Forecast -0.2%, versus +0.2% previous.
