USD/JPY Nosedives, Breaks Key Support Ahead of US GDP

Key Highlights

  • The US Dollar was under a lot of pressure recently and it declined below the 110.00 support against the Japanese Yen.
  • There is a major bearish trend line forming with current resistance at 110.60 on the 4-hours chart of USD/JPY.
  • On the downside, the next supports are at 108.50 and 108.00.
  • The US Initial Jobless Claims for the week ending Jan 20th 2017 increased from the last revised reading of 216K to 233K.

USD/JPY Technical Analysis

The US Dollar was under a lot of pressure this week as it tumbled below 110.00 against the Japanese Yen. The USD/JPY pair is in declining mode with the next support at 108.00.

USD/JPY Technical Analysis US Dollar Japanese Yen

Clearly, the pair is in a strong downtrend from the 113.00 swing high. Looking at the 4-hours chart of USD/JPY, there was a break below the 112.00 and 110.40 support levels. The downside move was such that the pair even broke the 109.00 level.

The recent low as 108.50 and it seems like the current downtrend is far from over. An initial resistance on the upside is around the 50% Fib retracement level of the last decline from the 111.22 high to 108.50 low.

However, the most important resistance is near 110.00, which acted as a support earlier. Moreover, there is a major bearish trend line forming with current resistance at 110.60 on the 4-hours chart.

If the pair continues to move down, the next key support on the downside is at 108.00. Below 108.00, the 107.50 support could act as a decent buy zone.

Fundamentally, the US Gross Domestic Product Annualized for Q4 2017 (preliminary reading) will be released by the US Bureau of Economic Analysis today. The market is looking for a 3.0% growth in Q4 2017, down from the last reading of 3.2%.

If the outcome fails to meet the forecast, the greenback could decline further versus all other major currencies. Both EUR/USD and GBP/USD are in the green zone and looks set for more upsides in the near term.

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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