Key Highlights
- The US Dollar after forming support near 107.50 against the Japanese Yen recovered well.
- There was a break above a major bearish trend line with resistance near 110.00 on the daily chart of USD/JPY.
- The US Consumer Price Index in August 2017 increased 0.4%, more than the forecast of +0.3% (MoM).
- The US Retail Sales for August 2017 will be released today, which is forecasted to increase by 0.1% (MoM).
USDJPY Technical Analysis
The US Dollar after a bear trend against the Japanese Yen found support at 107.50 and recovered. The USD/JPY pair needs to clear the 100-day simple moving average and 111.00 to gain further traction.
The past few days were decent for USD/JPY, as the pair recovered well from 107.50 and traded above the 109.00 and 110.00 resistance levels. During the upside move, there was also a break above a major bearish trend line with resistance near 110.00 on the daily chart.
However, the pair is currently trading below a crucial resistance at 111.00. The mentioned 111.00 is the 50% Fib retracement level of the last decline from the 114.49 high to 107.32 low. Moreover, the 100-day simple moving average is also at 111.10 to act as a key resistance.
Once there is a proper close above 111.00 and the 100-day SMA, the pair might continue gaining momentum in the near term.
US Consumer Price Index
Recently in the US, the Consumer Price Index for August 2017 was released by the US Bureau of Labor Statistics. The forecast was slated for an increase of 0.3% in the CPI compared with the previous month.
However, the actual result was better than the forecast, as the CPI posted an increase of 0.4%, compared with the last +0.1%. Looking at the yearly change in the CPI, there was a rise of 1.9%, more than the forecast of +1.8% and better than the last +1.7%.
The US CPI Ex Food & Energy also posted a better than the forecast increase of +1.7%, but similar to the last +1.7%.
The report added that:
The energy index rose 2.8 percent in August as the gasoline index increased 6.3 percent. The shelter index rose 0.5 percent in August with the rent index up 0.4 percent. The food index rose slightly in August, with the index for food away from home increasing and the food at home index declining.
Overall, it seems like the recent events in Japan, North Korea and the CPI release in the US might lift the USD/JPY pair above 110.50. However, a convincing break above the 100-day SMA and 111.00 is needed for sustained gains.
