Key Highlights
- The US Dollar formed a short term top at 114.20 and declined recently against the Japanese Yen.
- There was a break below a major ascending channel with support at 113.65 on the 4-hours chart of USD/JPY.
- The US Retail Sales in Oct 2018 increased 0.8%, more than the +0.5% forecast.
- Today, the US Industrial Production for Oct 2018 will be released, which is forecasted to increase 0.2% (MoM).
USDJPY Technical Analysis
The US Dollar struggled to hold gains above the 114.00 level and declined recently against the Japanese Yen. However, there are many supports on the downside near 113.00, which could hold losses in USD/JPY
Looking at the 4-hours chart, the pair formed a short term top at 114.20 and declined below the 114.00 and 113.80 support levels. During the decline, the pair traded below the 50% Fib retracement level of the last wave from the 112.94 low to 114.20 high.
Moreover, there was a break below a major ascending channel with support at 113.65 on the same chart. The pair is now trading well below 113.80 and it seems like it could continue to move down towards the 113.10 support and the 100 simple moving average (red, 4-hours).
There is also a solid support near the 113.00 level and the 200 simple moving average (green, 4-hours). Therefore, dips from the current levels are likely to find support near 113.10 or 113.00. The next key support is near 112.64, which is the 1.236 Fib extension level of the last wave from the 112.94 low to 114.20 high.
On the upside, the previous support at 113.80 is an initial resistance followed by 114.00. Finally, a break above 114.20 could push the pair towards 115.00.
Fundamentally, the US Retail Sales for Oct 2018 was released recently by the US Census Bureau. The market was looking for an increase of 0.5% in sales compared with the previous month.
However, the result was better as there was a rise of 0.8% in sales in Oct 2018, but the last reading was revised from +0.1% to -0.1%. Overall, the report was positive for the US Dollar, which means downsides in USD/JPY might be limited.
EUR/USD corrected higher recently, but it failed near the 1.1350 level and declined. Similarly, GBP/USD faced sellers near 1.3060 and declined sharply.
Economic Releases to Watch Today
- Euro Zone CPI for Oct 2018 (YoY) – Forecast +2.2%, versus +2.2% previous.
- Euro Zone CPI for Oct 2018 (MoM) – Forecast +0.2%, versus +0.5% previous.
- Euro Zone Core CPI for Oct 2018 (YoY) – Forecast +1.1%, versus +1.1% previous.
- US Industrial Production Oct 2018 (MoM) – Forecast 0.2%, versus +0.3% previous.
- US Capacity Utilization Oct 2018 – Forecast 78.2%, versus 78.1% previous.
