Key Highlights
- USD/JPY extended its decline below 108.50 and 108.00.
- Two bearish trend lines are forming with resistance near 108.30 and 108.60 on the 4-hours chart.
- EUR/USD is stable above 1.2000, but GBP/USD extended its decline below 1.3900.
- The US Manufacturing PMI could increase from 59.1 to 60.5 in April 2021 (Preliminary).
USD/JPY Technical Analysis
The US Dollar started following a bearish path from well above 110.00 against the Japanese Yen. USD/JPY broke many important supports near 109.00 and 108.50 to move into a bearish zone.
Looking at the 4-hours chart, the pair gained momentum after it broke the key 108.50 support. There was also a break below the 108.00 level. The pair traded as low as 107.80, and it settled well below the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).
On the upside, there are many hurdles forming near 108.50 and 108.60. There are also two bearish trend lines forming with resistance near 108.30 and 108.60.
The main resistance is now near the 109.00 zone and the 100 simple moving average (red, 4-hours). A close above 108.50, with a follow up move above 109.00 could open the doors for a steady increase.
If not, there is a risk of more downsides below the 107.80 and 107.50 levels. The next major support is near the 107.00 level.
Fundamentally, the US Initial Jobless Claims in the week ending April 17, 2021 was released yesterday by the US Department of Labor. The market was looking for a rise from 576K to 617K.
The actual result was better than the forecast, as there was a decline in the US Initial Jobless Claims to 547K. The last reading was revised up from 576K to 586K.
Overall, USD/JPY might correct higher, but it might face a strong resistance near 108.50. Conversely, EUR/USD remains elevated above the 1.2000 pivot level.
Economic Releases
- Germany’s Manufacturing PMI for April 2021 (Preliminary) – Forecast 65.8, versus 66.6 previous.
- Germany’s Services PMI for April 2021 (Preliminary) – Forecast 50.8, versus 51.5 previous.
- Euro Zone Manufacturing PMI April 2021 (Preliminary) – Forecast 62.0, versus 62.5 previous.
- Euro Zone Services PMI for April 2021 (Preliminary) – Forecast 49.1, versus 49.6 previous.
- UK Manufacturing PMI for April 2021 (Preliminary) – Forecast 59.0, versus 58.9 previous.
- UK Services PMI for April 2021 (Preliminary) – Forecast 59.0, versus 56.3 previous.
- US Manufacturing PMI for April 2021 (Preliminary) – Forecast 60.5, versus 59.1 previous.
- US Services PMI for April 2021 (Preliminary) – Forecast 61.5, versus 60.4 previous.
