Key Highlights
- USD/JPY started an upside correction from the 101.18 monthly low.
- A crucial bearish trend line is forming with resistance near 105.40 on the 4-hours chart.
- The US Initial Jobless Claims for the week ending March 07, 2020 declined from 215K to 211K.
- The US Import Price Index is likely to decline 0.8% in Feb 2020 (MoM).
USD/JPY Technical Analysis
The US Dollar found support near the 101.20 area after a massive decline against the Japanese Yen. USD/JPY is currently correcting higher, but it could fail near 106.00 or 106.70.
Looking at the 4-hours chart, the pair traded to a new multi-week low at 101.18 and settled well below the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).
Recently, the pair started an upside correction above the 103.50 resistance. There was a break above the 23.6% Fib retracement level of the main decline from the 112.22 swing high to 101.18 low.
On the upside, there are many resistances, starting with 105.40. More importantly, there is a crucial bearish trend line forming with resistance near 105.40.
If there is an upside break above the trend line, the pair could test the 50% Fib retracement level of the main decline from the 112.22 swing high to 101.18 low at 106.70. A successful break above the 106.70 level is needed to start a fresh increase in the coming days.
Conversely, the pair could resume its decline if it fails to continue above 106.00 or 106.70. An initial support is near the 103.50 level, below which there is a risk of a drop towards the 102.50 and 102.20 levels.
Fundamentally, the US Initial Jobless Claims figure for the week ending March 07, 2020 was released by the US Department of Labor. The market was looking for a rise in claims from 216K to 218K.
The actual result was better than the forecast, as the US Initial Jobless Claims declined to 211K. Besides, the last reading was revised down from 216K to 215K.
The report added:
The 4-week moving average was 214,000, an increase of 1,250 from the previous week’s revised average. The previous week’s average was revised down by 250 from 213,000 to 212,750.
Overall, USD/JPY could correct further, but it is likely to struggle above 106.00. More importantly, there was a sharp decline in EUR/USD and GBP/USD below 1.1300 and 1.2750 respectively.
Upcoming Economic Releases
- German Consumer Price Index for Feb 2020 (YoY) – Forecast +1.7%, versus +1.7% previous.
- German Consumer Price Index for Feb 2020 (MoM) – Forecast +0.4%, versus +0.4% previous.
- US Import Price Index Feb 2020 (MoM) – Forecast -0.8%, versus 0% previous.
- US Export Price Index Feb 2020 (MoM) – Forecast -0.4%, versus +0.7% previous.
