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USD/JPY Holds Key Support, What Could Trigger Fresh Increase?

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Aayush Jindal

Key Highlights

  • USD/JPY corrected heavily after it tested the 111.65 resistance zone.
  • A short-term bearish trend line is forming with resistance near 110.30 on the 4-hours chart.
  • EUR/JPY is struggling below 131.00, while GBP/JPY eyes a decent increase above 153.00.
  • The US Initial Jobless Claims declined from 386K to 360K in the week ending July 10, 2021.

USD/JPY Technical Analysis

The US Dollar started a major decline after trading as high as 111.65 against the Japanese Yen. USD/JPY declined below the 110.50 support zone, but the bulls protected 109.50.

Looking at the 4-hours chart, the pair seems to be forming a decent support base above 109.50. The recent swing low was near 109.73 and the pair is now consolidating losses.

The first key resistance is near the 110.20 level. It is close to the 50% Fib retracement level of the downward move from the 110.69 high to 109.73 low. There is also a short-term bearish trend line forming with resistance near 110.30 on the same chart.

Besides, the 200 simple moving average (green, 4-hours) is also near the 110.20 level. The next major resistance is near the 110.65 level and the 100 simple moving average (red, 4-hours).

A successful break above the trend line and then a follow up move above 110.65 could set the pace for a fresh increase. If not, there is a risk of a major decline below the 109.50 support zone.

Looking at EUR/USD, the pair is still trading heavily below 1.1850. Similarly, GBP/USD is struggling to gain momentum above the 1.3900 resistance zone.

Economic Releases

  • Euro Zone CPI for June 2021 (YoY) - Forecast +1.9%, versus +1.9% previous.
  • Euro Zone CPI for June 2021 (MoM) - Forecast +0.3%, versus +0.3% previous.
  • US Retail Sales for June 2021 (MoM) – Forecast -0.4%, versus -1.3% previous.
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