USD/JPY Facing Significant Resistance Ahead of US GDP

Key Highlights

  • USD/JPY struggled again to surpass the 109.70 resistance area.
  • The pair is showing bearish signs and it could correct below 109.20.
  • The US Initial Jobless Claims for the week ending Dec 14, 2019 declined from 252K to 234K.
  • The US GDP could grow 2.1% in Q3 2019, similar to the last reading.

USD/JPY Technical Analysis

This past week, there was a sharp increase in USD/JPY from the 108.40 support. The US Dollar rallied above 109.00, but it struggled again to surpass the 109.70 resistance area.

USD/JPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair traded as high as 109.70 and it is currently correcting lower. There was a break below 109.50 and a connecting bullish trend line on the same chart.

Moreover, there was a break below the 23.6% Fib retracement level of the upward move from the 108.46 low to 109.70 high. If the pair continues to decline, it could test the 109.00 support area and the 100 simple moving average (red).

Besides, the 50% Fib retracement level of the upward move from the 108.46 low to 109.70 high is also near the 109.05 level to provide support. Any further losses might lead the pair towards the 108.75 support.

On the upside, the pair must gain strength above the 109.70 and 109.80 resistance levels to continue higher in the near term.

Fundamentally, the US Initial Jobless Claims figure for the week ending Dec 14, 2019 was released by the US Department of Labor. The market was looking for a drop in claims from 252K to 225K.

However, the actual result was not in line with the forecast, as the US Initial Jobless Claims declined from 252K to 234K. Still, the there was a sharp 18K drop in claims.

The report added:

The 4-week moving average was 225,500, an increase of 1,500 from the previous week’s unrevised average of 224,000.

Overall, USD/JPY seems to be waiting for the US GDP release, which could either help it overcome the 109.70 hurdle or enable sellers to take control. On the other hand, both EUR/USD and GBP/USD are consolidating after the recent decline.

Upcoming Economic Releases

  • UK GDP Q3 2019 (Preliminary) (QoQ) – Forecast +1.0%, versus +1.0% previous.
  • US Gross Domestic Product Q3 2019 – Forecast 2.1% versus previous 2.1%.
  • US Personal Income for Nov 2019 (MoM) – Forecast +0.3%, versus 0% 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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