The USD/JPY dropped significantly on Thursday and erased the last two day’s gains, should touch new lows because the Nikkei stock index is still expected to drop in the next days. Price moves sideways on the Daily chart, but I hope that we’ll have a clear direction very soon.
It is expected to breakout from the symmetrical triangle, but remains to see the direction. A breakdown looks imminent at this moment because the Yen could dominate the currency market if the JP225 will drop towards the 19700 major static support.
Technically and Nikkei’s drop is natural after another failure to stabilize above the 20058 long term horizontal resistance. The Japanese currency will appreciate aggressively versus the other major currencies if the Nikkei will drop below the 19700 major static support (resistance turned into support).
Japan is releasing the Average Cash Earning later, which is expected to rise by 0.5% in June, less versus the 0.6% growth in the former reading period. We may have some volatility in the afternoon as the US will publish some high impact data.
USD/JPY move within a symmetrical triangle, should hit the downside line of this pattern in the upcoming hours and the 50% retracement level. Support can be found also at the warning line (wl1) of the minor ascending pitchfork. A valid breakdown below the mentioned support levels will open the door for more declines in the upcoming weeks, only a rejection along with a JP225 increase will send the rate higher again.
Price is trading right below the 110.00 psychological level, but we’ll see how will reach when will touch the mentioned support levels.
