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Aayush Jindal

Key Highlights

  • USD/JPY failed to surpass the 111.70 resistance and started correcting gains.
  • A major bullish trend line was breached with support at 110.45 on the 4-hours chart.
  • The US Gross Domestic Product grew 2.1% in Q4 2019, in line with the forecast.
  • The US Personal Income is likely to increase 0.4% in Feb 2020 (MoM).

USD/JPY Technical Analysis

This month, the US Dollar started a steady increase above the 106.00 hurdle against the Japanese Yen. USD/JPY gained pace above 110.00, but it struggled to continue above the 111.70 resistance.

Looking at the 4-hours chart, the pair traded as high as 111.64 and it settled nicely above the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

It is currently correcting lower from 111.64 and trading below 111.20. Besides, there was a break below a major bullish trend line with support at 110.45.

On the downside, an initial support is near the 109.15 level. The 23.6% Fib retracement level of the main upward move from the 101.18 low to 111.64 high could also provide support.

The first key support is near the 108.55 level and the 200 simple moving average (green, 4-hours). Any further losses might start an extended decline towards the 107.40 level or the 100 simple moving average (red, 4-hours).

Overall, the pair is currently correcting lower, but it is likely to find strong bids near 108.55 or 107.40 in the near term.

Fundamentally, the US Gross Domestic Product report for Q4 2019 was released by the US Bureau of Economic Analysis. The market was looking for a growth rate of 2.1% in Q4 2019.

The actual result was in line with the forecast, as the US Gross Domestic Product increased at an annual rate of 2.1% in the fourth quarter of 2019, according to the "third" estimate.

The report added:

Current‑dollar GDP increased 3.5 percent, or $186.6 billion, in the fourth quarter to a level of $21.73 trillion. In the third quarter, current-dollar GDP increased 3.8 percent, or $202.2 billion.

Overall, USD/JPY is currently correcting gains, while EUR/USD and GBP/USD are showing positive recovery signs.

Upcoming Economic Releases

  • US Personal Income for Feb 2020 (MoM) - Forecast +0.4%, versus +0.6% previous.
  • US Personal Spending for Feb 2020 - Forecast +0.2%, versus +0.2% previous.