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Aayush Jindal

Key Highlights

  • USD/JPY started a major decline below the 137.50 support.
  • It could continue to move down if there is a close below 134.20.
  • The US Gross Domestic Product contracted 0.9% in Q2 2022 (Preliminary).
  • The Euro Zone GDP could grow 0.2% in Q2 2022 (Preliminary) (QoQ).

USD/JPY Technical Analysis

The US Dollar formed a major top near the 139.40 zone against the Japanese Yen. USD/JPY declined heavily below the 137.50 and 136.50 levels.

Looking at the 4-hours chart, the pair even settled below the 136.50 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours). During the decline, there was a break below a key bullish trend line at 136.10.

The pair even spiked below the 135.00 level and tested the 134.40 support zone. The pair is now consolidating losses near the 134.50 level.

On the upside, the pair is facing resistance near the 135.00 level. The first major resistance is near the 135.50 level, above which the pair might recover and test the 200 simple moving average (green, 4-hours) or the 50% Fib retracement level of the key decline from the 139.39 swing high to 134.34 low.

Any more gains might send the pair towards the 136.20 level. If there is no recovery, the pair might continue to move down below 134.40.

The next major support is 134.00, below which the pair could accelerate lower towards 132.50. Any more losses might send the pair towards the 131.50 zone.

Fundamentally, the US Gross Domestic Product report for Q2 2022 was released yesterday by the US Bureau of Economic Analysis. The market was looking for a minor rise in the GDP by 0.5%.

However, the actual result was disappointing, as the US Gross Domestic Product contracted 0.9% in Q2 2022 (Preliminary). This could be a strong signal that a recession is underway.

Looking at EUR/USD, the pair is still struggling below the 1.0280 resistance level, but there are signs of an upside break. Besides, GBP/USD climbed above the 1.2050 resistance.

Economic Releases

  • German Gross Domestic Product for Q2 2022 (QoQ) (Preliminary) – Forecast 0.1%, versus 0.2% previous.
  • Euro Zone Gross Domestic Product Q2 2022 (Preliminary) (QoQ) - Forecast 0.2%, versus 0.6% previous.
  • US Personal Income for June 2022 (MoM) - Forecast +0.5%, versus +0.5% previous.