Key Highlights
- The US Dollar traded towards the 110.00 level recently and later corrected lower against the Japanese Yen.
- There is a crucial bullish trend line formed with support at 109.30 on the 4-hours chart of USD/JPY.
- The US Initial Jobless Claims for the week ending Jan 19, 2019 declined from 212K to 199K.
- The German IFO Business Climate Index for Jan 2019 will be released today, which could decline from 101.0 to 100.6.
USDJPY Technical Analysis
The US Dollar started a steady upward move from the 108.00 support against the Japanese Yen. The USD/JPY pair traded above the 109.00 and 109.50 resistance levels before facing sellers near 111.00.
Looking at the 4-hours chart, the pair recently climbed higher from the 109.14 low and traded as high as 109.99. Later, the pair corrected lower and traded below the 109.60 support plus the 50% Fib retracement level of the last wave from the 109.14 low to 109.99 high.
However, the decline was protected by the 109.40-109.50 support and the 61.8% Fib retracement level of the last wave from the 109.14 low to 109.99 high. More importantly, there is a crucial bullish trend line formed with support at 109.30.
Therefore, if the pair declines further, it is likely to find a strong buying interest above the 109.20 pivot level. Alternatively, if there is a downside break below 109.20 and 109.00, the pair could decline towards the 108.80 level and the 100 simple moving average (red, 4-hours).
On the upside, the main resistance is near the 110.00 level, above which the pair is likely to gain strength for more gains towards the 111.20 and 111.40 levels.
Fundamentally, the US Initial Jobless Claims figure for the week ending Jan 19, 2019 was released. The market was looking for a rise in claims from the last reading of 213K to 220K.
The actual result was way better than the forecast as there was a drop in jobless claims to 199K (the lowest level for initial claims since November 15, 1969). Moreover, the last reading was revised down from 213K to 212K. The report stated that:
The 4-week moving average was 215,000, a decrease of 5,500 from the previous week’s revised average. The previous week’s average was revised down by 250 from 220,750 to 220,500.
Overall, the US Dollar might correct a few pips, but it remains well supported for more gains above 111.00 versus the Japanese Yen. More importantly, EUR/USD faced an increased selling pressure and declined below 1.1360, while GBP/USD stayed above the 1.2950 support.
Economic Releases to Watch Today
- German IFO Business Climate Index for Jan 2019 – Forecast 109.6, versus 109.8 previous.
- German IFO Current Assessment Index Jan 2019 – Forecast 117.9, versus 118.4 previous.
- German IFO Expectations Index for Jan 2019 – Forecast 104, versus 104 previous.
