Key Highlights
- The US Dollar faced bearish pressure after the fed rate decision and declined below 113.00 against the Japanese Yen.
- USD/JPY also broke a crucial support area near 112.30 and a bullish trend line on the 4-hours chart.
- Japan’s Tankan Large Manufacturing Index in Q4 2017 posted an increase from 22 to 25.
- Today’s Industrial production report in the US could be important since the production is forecasted to increase by 0.3% (MoM).
USDJPY Technical Analysis
After a steady rise, the US Dollar faced offers near 113.75 against the Japanese Yen. The USD/JPY pair declined and moved below the 113.00 support area to break 112.50.
The fed interest rate decision and yesterday’s CPI release were the main drivers of the recent downside move from 113.75. At the outset, the 4-hours chart of USD/JPY suggests that the recent break below the 112.30-40 support area holds a lot of importance.
There was a bullish trend line positioned at 112.50 on the same chart. More importantly, the 100 simple moving average (red, 4-hour) was at 112.30. Sellers also succeeded in pushing the pair below the 50% fib retracement level of the last wave from the 110.84 low to 113.75 high.
Therefore, a close below the 112.30 support means there could be more declines in USD/JPY toward 112.00 and 111.60. An intermediate support on the downside is around the 61.8% fib retracement level of the last wave from the 110.84 low to 113.75 high.
On the upside, the broken support at 112.30 and 112.50 are likely to act as a resistance. However, the most important resistance on the upside is around the 200 simple moving average (green, 4-hou) at 112.85.
Looking at the 4-hour RSI for USD/JPY, there is a declining pattern below the neutral level. Therefore, buyers will most likely struggle to retain bullish traction in the near term.
The current market sentiment is mixed for the US dollar since EUR/USD failed to remain above the 1.1820 level. On the other hand, GBP/USD was able to settle above the 1.3400 support. Therefore, it would be interesting to see how this week ends for the greenback and especially USD/JPY.
