- The USD/JPY pair drops deeper after validating its breakdown below the uptrend line.
- The lower median line (lml) could attract the price.
- A larger downside movement could be activated by a valid breakdown through the lower median line (lml).
Our USD/JPY forecast sees the pair plunging as the US Dollar was weakened by the Dollar Index’s sell-off. On the other hand, the Japanese Yen is strongly bullish as the Japanese Yen Futures have rallied, while the Nikkei plunged. From the technical point of view, the currency pair is in a corrective phase.
In the short term, it has taken out strong support levels, so further drop is natural.
In the morning, the Yen was supported by the Japanese Housing Starts which registered a 10.4% compared to 5.4% expected and compared to 4.3% growth in the previous reporting period, and by the Unemployment Rate which dropped from 2.8% to 2.7%.
Unfortunately, the Japanese Prelim Industrial Production registered only a 1.1% growth versus 1.9% expected.
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The USD/JPY pair could try to rebound only if the United States economic data will come in better than expected later today. The CB Consumer Confidence could be reported at 110.8 points, lower versus 113.8 in the previous reporting period. In addition, the Chicago PMI may drop from 68.4 to 67.1 points. You also have to be careful around the Fed Chair Powell Testifies, the volatility could be high around this event.
USD/JPY Forecast: Price Technical Analysis – Valid Breakdown
The USD/JPY pair maintains a bearish bias after making a new low, after closing below 113.07 former low. In the short term, the pair has rebounded, coming back to test and retest the uptrend line and the descending pitchfork’s median line (ml).
It has tested the weekly pivot point (113.93) as well, so now it could approach and reach the weekly S1 (112.34) level. Also, the price could be attracted by the descending pitchfork’s lower median line (lml).
The 112.21 level stands as a static support as well. The USD/JPY pair could extend its sell-off after ignoring the 113.00 psychological level.
A larger downside movement could be activated by a valid breakdown below the lower median line (lml) and under 112.21.
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