USD/JPY – US Dollar Poised To Extend Declines Vs Japanese Yen

Key Highlights

  • The US Dollar broke a major support area at 110.00 against the Japanese Yen to form a downtrend.
  • There was a break below a key bullish trend line at 110.00-110.10 on the daily chart of USD/JPY.
  • The US Initial Jobless Claims for the week ending Aug 5 2017 released yesterday posted an increase from 241K (revised) to 244K.
  • The US Consumer Price Index for July 2017 will be released today. The forecast is an increase of 1.8% (YoY), more than the last 1.6%.

USDJPY Technical Analysis

The US Dollar failed to recover above 111.00 against the Japanese Yen. The USD/JPY pair broke a crucial support at 110.00 to initialize a major downtrend in the near term.

USDJPY Technical Analysis US Dollar Japanese Yen

The daily chart of the USD/JPY pair clearly highlights back-to-back bearish candles from the 114.50 high. The pair even traded below the 112.00 support, 100-day and 200-day simple moving average.

There was also a break below a key bullish trend line at 110.00-110.10 on the daily chart, which has opened the gates for more declines.

If the recent break it true, the pair may soon test the last swing low of 108.15. It could even test the 1.236 extension of the last wave from the 108.80 low to 114.49 high. On the upside, the broken support at 110.00 is now a key resistance.

US Initial Jobless Claims

Recently in the US, the Initial Jobless Claims for the week ending Aug 5 2017 was released by the US Department of Labor. The market was aligned for no change from the last reading of 240K.

However, the actual result was a bit on the lower side, as there was a rise in claims to 244K. The last reading was revised up from 240K to 241K. The 4-week moving average now stands at 241,000, which is 1K less than the previous week’s revised average.

US Initial Jobless Claims Aug 5 2017

The report added that:

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending July 29, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 29 was 1,951,000, a decrease of 16,000 from the previous week’s revised level.

Overall, the USD/JPY pair remains in a downtrend and it might continue to decline towards 108.00 in the near term.

Economic Releases to Watch Today

  • US Consumer Price Index July 2017 (MoM) – Forecast +0.2%, versus 0.0% previous.
  • US Consumer Price Index July 2017 (YoY) – Forecast +1.8%, versus +1.6% previous.
  • US Consumer Price Index Ex Food & Energy July 2017 (YoY) – Forecast +1.7%, versus +1.7% 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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