Home USD/JPY Price Faces Retracement Ahead of US Inflation Data

USD/JPY Price Faces Retracement Ahead of US Inflation Data

  • The currency pair could extend its sell-off after taking out the near-term support levels.
  • The fundamentals should move the price tomorrow.
  • After its massive drop, a rebound could be natural.

The USD/JPY price crashed quickly as the week started. The sellers seem determined to hit new lows. The price is at 140.22, far below Friday’s high of 145.07.

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The Japanese Yen took full control as the Yen Futures rallied. On the other hand, the US dollar depreciated versus all its rivals.

The greenback lost significant ground versus its rivals as the NFP came in worse than expected on Friday. Surprisingly or not, the JPY appreciated even though the Economy Watchers Sentiment, Current Account, and Bank Lending came in worse than expected.

Today, Japan reported mixed data, while the US NFIB Small Business Index reported positive data. Tomorrow, Japan is to release the PPI and Core Machinery Orders.

The US inflation figures represent the most important event. The US Consumer Price Index is expected to report a 0.3% versus 0.1% growth in the previous reporting period, while Core CPI could register a 0.3% growth. In addition, the BOC could also have a big impact on the USD.

USD/JPY Price Technical Analysis: Massive Drop

USD/JPY price
USD/JPY price hourly chart

The USD/JPY pair failed to reach the median line (ML) of the ascending pitchfork. Now it has turned to the downside.

The pair has ignored the 23.6% (141.45) and the lower median line (LML). These represented major downside obstacles, so a larger drop is natural. It has reached the weekly S2 (140.16), which stands as static support.

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The 38.2% (139.19) retracement level represents a major downside target. Technically, we have a strong demand zone around the 139.00 psychological level.

Still, after this massive sell-off, we cannot exclude a temporary rebound, as the price may try to retest the resistance levels before extending its sell-off.

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Olimpiu Tuns

Olimpiu Tuns

Olimpiu Tuns graduated with a Master in Business Administration and is a seasoned Market Analyst / Trader / Trainer with 10 years of experience in the financial markets having expertise in Forex, Commodities, Index, Cryptocurrencies, and Stocks. He worked as a Market Analyst for three major brokerage companies, as a prop trader, and as a contributor/content creator for news portals and educational platforms.