The currency pair has dropped sharply in the morning and seems poised to start a corrective phase. The Yen has taken the lead again as the Nikkie stock index plunges after the impressive rally. Technically, the currency pair maintains a bullish perspective, despite a minor retreat.
USD/JPY moves in range on the short term, so we’ll have a clear direction once will escape from this extended sideways movement. The Japanese currency could dominate the currency market in the upcoming days as the JP225 could come to retest the 20058 former horizontal resistance. I’ve said in the last reports that the index is expected to retreat a little after the upside momentum.
Surprisingly or not, the USD is losing ground versus all its rivals even if the United States data have come in better on Thursday.
Price is still trapped within the extended sideways movement, it was expected to climb towards the 23.6% retracement level, but has fond strong resistance at the confluence formed between the median line (ml) of the minor ascending pitchfork with the first warning line (wl1). USD/JPY was rejected by the mentioned confluence and now will hit the 38.2% retracement level. Could come down to retest the third warning line (WL3) to validate this dynamic support (resistance turned into support).
A further Nikkei retreat will send the rate towards the 250% Fibonacci line and towards the lower median line (lml) of the minor ascending pitchfork.