- The bias remains bullish despite a temporary retreat.
- Coming back above the resistance levels may announce further growth.
- Only validating the breakdown should confirm a larger drop.
The USD/JPY price climbed as high as 146.56 today, where it found strong resistance. Now, it has retreated and is located at 145.82.
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After its strong upwards movement, a downside correction was due. The price could register a temporary drop trying to attract more buyers before resuming its rally.
Fundamentally, the US Industrial Production and Capacity Utilization Rate came in better than expected, Building Permits remained at 1.44M, while Housing Starts aligned with expectations.
Furthermore, the FOMC Meeting Minutes were more hawkish than expected, but the USD/JPY pair was overbought. Still, the bias remains bullish. Further growth is natural after ending the short-term drop.
Surprisingly or not, the JPY took the lead today even though the Japanese Tertiary Industry Activity, Trade Balance, and Core Machinery Orders came in worse than expected.
Now, the USD is trying to rebound and recover after its temporary drop as the Unemployment Claims were reported at 239K versus 240K. At the same time, the Philly Fed Manufacturing Index came in the positive territory at 12.0 points versus the -9.8 points estimated. The CB Leading Index registered a 0.4% drop, as expected.
USD/JPY Price Technical Analysis: Downside correction
As you can see on the hourly chart, the price jumped above the weekly R1 (146.11). However, it has failed to stay above this broken obstacle.
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It has now dropped below the median line (ML), representing dynamic support signaling strong downside pressure.
Technically, the price could return to retest the median line (ML) and the R1. Testing these resistance levels and registering false breakouts could trigger a larger drop. On the contrary, returning above these levels indicates that that retreat ended and the price could extend its growth.
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