USD/JPY Could Decline Further Below 109.50

Key Highlights

  • The US Dollar failed to break 110.65 and declined recently against the Japanese Yen.
  • A crucial bearish trend line is active with resistance at 110.50 on the 4-hours chart of USD/JPY.
  • The US Initial Jobless Claims for the week ending May 18, 2019 declined from 212K to 211K.
  • The US Durable Goods in April 2019 might decline 2%, down from the last +2.8%.

USDJPY Technical Analysis

The US Dollar started a decent recovery from the 109.02 low against the Japanese Yen. The USD/JPY pair traded above 110.00, but it failed to surpass 110.65 and recently started a fresh decline.

USDJPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair struggled to stay above the 110.60 level and the 100 simple moving average (4-hours, red). There was a break below the 23.6% Fib retracement level of the upward move from the 109.02 low to 110.67 high.

Moreover, there is a crucial bearish trend line active with resistance at 110.50 on the same chart. If the pair continues to move down, the next key support is near the 109.80 level plus the 50% Fib retracement level of the upward move from the 109.02 low to 110.67 high.

However, a successful close below the 109.50 support may perhaps open the doors for more losses towards the last swing low at 109.02.

On the upside, the 100 SMA and the bearish trend line at 1140.50 is likely to act as a strong barrier for the bulls. If they succeed in clearing the 110.50 and 110.65 levels, USD/JPY could accelerate towards the 111.00 and 111.20 levels.

Fundamentally, the US Initial Jobless Claims figure for the week ending May 18, 2019 was released by the US Department of Labor. The market was looking for a minor increase from 212K to 215K.

The actual result better than the forecast, as there was a decline in the US Initial Jobless Claims from 212K to 211K.

The report added:

The 4-week moving average was 220,250, a decrease of 4,750 from the previous week’s unrevised average of 225,000.

Overall, USD/JPY remains at a risk of more declines unless it breaks the 110.50 and 110.65 resistance levels. The main supports on the downside are 109.50 and 109.00. Looking at EUR/USD and GBP/USD, both major pairs struggled this week and they could continue to slide in the near term.

Economic Releases to Watch Today

  • UK Retail Sales for April 2019 (YoY) – Forecast +4.6%, versus +6.7% previous.
  • UK Retail Sales for April 2019 (MoM) – Forecast -0.3%, versus +1.1% previous.
  • US Durable Goods Orders for April 2019 – Forecast -2.0% versus +2.8% previous.


Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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