The USD/JPY dropped today and retested a broken dynamic support (resistance turned into support). Price increased sharply in the yesterday’s trading session as the Yen was punished by the Nikkei’s further increase. The Japanese stock index has managed to touch fresh new highs in the morning, has climbed as much as 21392 high, but failed to stay there and now is trading below the 21350 yesterday’s high. I’ve said in the last day’s that the JP225 could drop a little after the impressive rally, this situation will send the Yen higher. However, Nikkei’s further increase will force the Yen to depreciate.
The greenback still needs a helping hand from the United States data, the Import Prices may increase by 0.6%, matching the 0.6% growth in the former reading period, the Capacity Utilization Rate could increase from 76.1% to 76.2%, while the Industrial Production is expected to increase by 0.3% in September versus the 0.9% drop in the former reading period.
The USD/JPY has managed to jump above the upper median line (uml) of the minor descending pitchfork after the failure to reach the 38.2% retracement level. A retest of the upper median line (uml) will signal a further increase on the short term. Price is trading near the 112.20 level and it could consolidate on the short term before will recapture enough energy to be able to start a larger increase.
