USD/JPY increased significantly and is almost in a position to erase the previous sell-off. The outlook is bullish at this favourable juncture, so further growth is to be expected.
The pair has resumed its growth even the US Dollar Index (DXY) has decreased a little in the last few hours.
US Existing Home Sales Fall
Existing home sales fell 0.9% to a seasonally adjusted annual rate of 5.80 million units in May, which is in line with the pre-pandemic readings, according to the data release from the National Association of Realtors. On a regional view, home sales fell in the Northeast, West and the South. However sales rose in the Midwest.
Economists surveyed by Reuters forecast sales to drop to a rate of 5.72 million units in May.
Breaking down the figures further, home resales, which make up the vast majority of home sales in the US, rocketed 44.6% year on year. However, the news comes with a base effect to take into account that distorted the data, because there was a large plunge in sales in May 2020 as the pandemic set in and lockdowns came into force across the nation.
USD/JPY Remains Bullish
USD/JPY is bullish and it could could even reach fresh new highs if the US Federal Reserve Chairman Jerome Powell takes a hawkish tone later today in testimony to the US Congress.
Forex traders will be eagerly awaiting the US release of Flash Manufacturing PMI and the Flash Services data tomorrow. Poor economic figures could send the pair down again but this seems unlikely.
USD/JPY forex trading: technical analysis
USD/JPY has increased to the extent that it is almost in sight of the weekly R1 (110.83) level and 110.82 former high. The pair had lost some value in its retest of 109.69 static support before resuming its bullish run. USD/JPY has failed to retest the uptrend line signalling strengthening buying interest.
By making a new higher high by closing above the R1 110.83, it could bring an upside breakout through 110.96. Moving above the immediate obstacles could announce a potential shift higher towards the ascending channel’s resistance.
A new temporary decline could be signalled by a false breakout above the R1 (110.83) level. We are at resistance, so we cannot exclude a minor decline. This scenario will take shape only if the US Dollar Index registers a strong drop.
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