Key Highlights
- The US Dollar declined heavily and broke the 112.00 support against the Japanese Yen.
- USD/JPY failed to break the 113.80-114.00 resistance zone and declined sharply.
- The US Initial Jobless Claims for the week ending Dec 15, 2018 increased from 206K to 214K.
- Today, the US Gross Domestic Product for Q3 2018 will be released, which is forecasted to grow 3.5%.
USDJPY Technical Analysis
This past week, the US Dollar failed to clear a crucial resistance near the 113.80-114.00 zone against the Japanese Yen. The USD/JPY pair started a major decline and broke the 113.00 and 112.00 supports.
Looking at the 4-hours chart, the pair weakened a lot and settled below the key 112.20 support. During the decline, the pair broke a connecting support trend line at 112.18 and traded below the 1.236 Fib extension level of the last wave from the 112.24 low to 113.70 high at 111.89.
There was even a close below the 112.00 level and the 100 simple moving average (4-hours). It cleared the path for more declines and the pair accelerated towards the 111.00 level.
An immediate support is near 110.40 and the 2.618 Fib extension level of the last wave from the 112.24 low to 113.70 high. If there is a break below 110.40 and 110.00, the pair may extend losses towards 109.50.
On the upside, the previous key supports at 112.00 and 112.20 are likely to act as a strong barriers if the pair starts a recovery in the near term.
Fundamentally, the US Initial Jobless Claims figure for the week ending Dec 15, 2018 was released by the US Department of Labor. The market was looking for an increase from the last reading of 206K to 216K.
The result was better than the forecast since the US Initial Jobless Claims increased only 8K from 206K to 214K. The report stated that:
The 4-week moving average was 222,000, a decrease of 2,750 from the previous week’s unrevised average of 224,750.
Overall, USD/JPY moved into a bearish zone below 112.00 and it may continue to trade lower in the short term. On the other hand, major pairs like EUR/USD and GBP/USD recovered nicely, but today’s GDP report in the US could impact the market sentiment for the greenback.
Economic Releases to Watch Today
- UK GDP for Q3 2018 (QoQ) – Forecast +0.6%, versus +0.6% previous.
- US Durable Goods Orders for Nov 2018 – Forecast +1.6% versus -4.4% previous.
- US Gross Domestic Product Q3 2018 – Forecast 3.5% versus previous 3.5%.
- US Personal Income for Nov 2018 (MoM) – Forecast +0.3%, versus +0.5% previous.
