Key Highlights
- USD/JPY surpassed a major hurdle near the 109.70 resistance area.
- The pair is likely to gain bullish momentum above 110.40 in the near term.
- The US Retail Sales increased 0.3% in Dec 2019 (MoM), similar to the forecast.
- The US Industrial Production could decline 0.2% in Dec 2019 (MoM), down from the last +1.1%.
USD/JPY Technical Analysis
Earlier this week, USD/JPY finally surpassed a major hurdle near the 109.70 resistance area. The US Dollar is now trading in a bullish zone and it is likely to accelerate further towards 111.00.
Looking at the 4-hours chart, the pair made many attempts to clear 109.70 before the bulls gained strength. The pair settled nicely above 109.70 and the 100 simple moving average (red, 4-hours).
It even tested the 1.236 Fib extension level last major decline from the 109.68 high to 107.65 low. In the short term, there could a downside correction, but dips are likely to remain well supported near 109.70 and 109.50.
On the upside, a clear break above the 110.20 and 110.40 resistance levels might lead the USD/JPY pair towards the 111.00 resistance or the 1.618 Fib extension level last major decline from the 109.68 high to 107.65 low at 110.94.
Conversely, a daily close below the 109.20 support and the 100 SMA might push the pair back into a bearish zone. The next key support is near the 108.40 level.
Fundamentally, the US Retail Sales report for Dec 2019 was released by the US Census Bureau. The market was looking for sales to increase 0.3% in Dec 2019 compared with the previous month.
The actual result was in line with the forecast, as the US Retail Sales increased 0.3%. Looking at the Retail Sales ex Autos, there was a 0.7% rise, more than the 0.5% forecast.
The report added:
Total sales for the October 2019 through December 2019 period were up 4.1 percent (±0.5 percent) from the same period a year ago.
Overall, USD/JPY is likely to continue higher above 110.40. Looking at EUR/USD and GBP/USD, both pairs are facing hurdles near 1.1180 and 1.3100 respectively.
Upcoming Economic Releases
- UK Retail Sales for Dec 2019 (YoY) – Forecast +2.6%, versus +1% previous.
- UK Retail Sales for Dec 2019 (MoM) – Forecast +0.7%, versus -0.6% previous.
- Euro Zone CPI for Dec 2019 (YoY) – Forecast +1.3%, versus +1.3% previous.
- Euro Zone CPI for Dec 2019 (MoM) – Forecast +0.3%, versus -0.3% previous.
- Euro Zone Core CPI for Dec 2019 (YoY) – Forecast +1.3%, versus +1.3% previous.
- US Industrial Production Dec 2019 (MoM) – Forecast -0.2%, versus +1.1% previous.
