Key Highlights
- The US Dollar failed again to break the 114.00 resistance area against the Japanese Yen.
- There is a key bearish trend line formed with resistance at 114.00 on the 4-hours chart of USD/JPY.
- The Tokyo Consumer Price Index increased 0.8% (YoY) in Nov 2018, less than the market forecast of 1.0%.
- Today in the US, the Chicago Purchasing Manager’s Index for Nov 2018 will be released, which is forecasted to decline from 58.4 to 58.0.
USDJPY Technical Analysis
The US Dollar gained bullish momentum this past week and traded above 113.40 against the Japanese Yen. However, the USD/JPY pair failed again to break the 114.00 resistance area and corrected lower recently.
Looking at the 4-hours chart, the pair traded as high as 114.03 and later started a short term downside correction. It traded below the 113.60 support and the 23.6% Fib retracement level of the last wave from the 112.30 low to 114.03 high.
The pair also broke the 100 simple moving average (red, 4-hours) and tested the 113.20 support. The pair remained under pressure below the 113.60 level and it seems like it could decline further.
The next major support is near 112.95 and the 61.8% Fib retracement level of the last wave from the 112.30 low to 114.03 high, which coincides with the 200 simple moving average (green, 4-hours).
On the upside, an initial resistance is near 113.80 followed by 113.85. More importantly, there is key bearish trend line formed with resistance at 114.00. Therefore, a successful close above 114.00 could open the doors for a larger upward move towards 115.00 in the near term.
Fundamentally, the US Personal Income figure for Oct 2018 was released by the Bureau of Economic Analysis, Department of Commerce. The market was looking for an increase of 0.4% in the personal income compared with the previous month.
The result was positive as there was a rise in the personal income by 0.5%, which was also a lot more than the last +0.2%.
In the short term, there could be losses in the US Dollar, but USD/JPY is likely to bounce back after a minor downside correction.
Economic Releases to Watch Today
- Euro Zone CPI for Nov 2018 (YoY) (Prelim) – Forecast +2.0%, versus +2.2% previous.
- Euro Zone Core CPI for Nov 2018 (YoY) (Prelim) – Forecast +1.1%, versus +1.1% previous.
- Chicago Purchasing Manager’s Index for Nov 2018 – Forecast 58.0, versus 58.4 previous.
