Key Highlights
- USD/JPY topped near 110.30 and declined below the 109.75 support.
- There was a break below a key bullish trend line with support near 109.40 on the 4-hours chart.
- The US GDP grew 2.1% in Q4 2019 (Prelim), similar to the market forecast.
- The US Personal Income is likely to increase 0.3% in Dec 2019 (MoM).
USD/JPY Technical Analysis
Earlier this month, USD/JPY broke the 110.00 resistance area. However, the US Dollar struggled to stay above 110.00, formed a top near 110.30, and started a fresh decline.
Looking at the 4-hours chart, the pair broke a few key supports near the 110.00 and 109.75 levels to move into a bearish zone. The bears even pushed the pair below the 109.50 level.
Moreover, there was a break below a key bullish trend line with support near 109.40. Finally, the pair settled below 109.50, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).
Recently, it spiked below the 50% Fib retracement level of the last key upward move from the 107.65 low to 110.29 high. On the downside, there is a decent support near the 108.65 and 108.50 levels.
The 61.8% Fib retracement level of the last key upward move from the 107.65 low to 110.29 high is also near 108.65. If there is a downside break below the 108.50 support, the pair could slide back towards 108.00 and 107.65.
On the upside, the bulls need to clear the 109.50 resistance and the 100 SMA to move back into a positive zone in the near term.
Fundamentally, the US Gross Domestic Product report for Q4 2019 (Prelim) was released by the US Bureau of Economic Analysis. The market was looking the GDP to grow 2.1% in Q4 2019.
The actual result was in line with the forecast, as the US GDP increased at an annual rate of 2.1%, according to the “advance” estimate.
The report added:
Current dollar GDP increased 3.6 percent, or $191.7 billion, in the fourth quarter to a level of $21.73 trillion. In the third quarter, GDP increased 3.8 percent, or $202.3 billion.
Overall, USD/JPY might struggle to move back above 109.50 and it could slide below 108.50. Besides, both EUR/USD and GBP/USD started an upside correction.
Upcoming Economic Releases
- Euro Zone GDP Q4 2019 (Preliminary) (QoQ) – Forecast 0.2%, versus 0.2% previous.
- US Personal Income for Dec 2019 (MoM) – Forecast +0.3%, versus +0.5% previous.
- Canadian GDP for Nov 2019 (MoM) – Forecast 0%, versus -0.1% previous.
