USD/JPY Could Retest 107.00 Before Fresh Increase

Key Highlights

  • The US Dollar struggled near 109.00 and declined below 108.00 against the Japanese Yen.
  • USD/JPY traded below a major bullish trend line with support at 108.05 on the 4-hours.
  • The US Initial Jobless Claims for the week ending July 13, 2019 increased from 208K to 216K.
  • The Michigan Consumer Sentiment Index in July 2019 (Prelim) might increase from 98.2 to 98.5.

USDJPY Technical Analysis

The US Dollar failed to surpass the 109.00 resistance level against the Japanese Yen. As a result, the USD/JPY pair started a bearish wave and broke the 108.00 and 107.80 support levels.

USDJPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair formed a top just below the 109.00 and recently started a significant downward move. The pair broke the 108.10 pivot level and settled below the 100 simple moving average (red, 4-hours).

Moreover, the pair traded below a major bullish trend line with support at 108.05. It opened the doors for more losses below 107.80 and 107.50.

A swing low was formed near 107.21 and the pair is currently correcting higher. An initial resistance is near the 107.60 level plus the 23.6% Fib retracement level of the downward move from the 108.99 high to 107.1 low.

However, the main resistance is near the 108.00 and 108.10 levels. Moreover, the 100 simple moving average (red, 4-hours) is also positioned near the 108.10 level to act as a strong resistance.

Therefore, upsides in USD/JPY could be capped near the 108.00 area and the pair might resume its decline below the 107.20 level in the near term. The next key supports are near 107.00 and 106.80.

Fundamentally, the US Initial Jobless Claims report for the week ending July 13, 2019 was released by the US Department of Labor. The market was looking for an increase in claims from 209K to 216K.

The actual result was similar to the forecast as the US Initial Jobless Claims increased to 216K. Besides, the last reading was revised from 209K to 208K.

The report added:

The previous week’s level was revised down by 1,000 from 209,000 to 208,000. The 4-week moving average was 218,750, a decrease of 250 from the previous week’s revised average. The previous week’s average was revised down by 250 from 219,250 to 219,000.

Overall, the US Dollar is correcting lower, resulting in a decent recovery in EUR/USD and GBP/USD.

Economic Releases to Watch Today

  • Canadian Retail Sales May 2019 (MoM) – Forecast +0.3%, versus +0.1% previous.
  • Canadian Retail Sales ex Autos May 2019 (MoM) – Forecast +0.4%, versus +0.1% previous.
  • Michigan Consumer Sentiment Index July 2019 – Forecast 98.5, versus 98.2 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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