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  • The USD/JPY pair could extend its downside movement as long as it stays within the descending pitchfork’s body.
  • Escaping from the major triangle pattern signalled that we may have a corrective phase.
  • A larger downside movement could be activated by a valid breakdown below the 38.2% retracement level.

Our USD/JPY forecast sees the pair trading at 112.87 level after failing to move back higher. The pressure is high in the short term, so further drop is natural after escaping from a major chart pattern. As you already know, the currency pair activated a corrective phase after the buyers showed exhaustion signs. 

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Also, the US Dollar lost significant ground as the Dollar Index has turned to the downside. DXY registered only a false breakout above the 94.50 static resistance. On the other hand, JP225’s sell-off and the Japanese Yen Futures’ rally forced the Yen to appreciate.

Fundamentally, the Yen received a helping hand from the Japanese Economy Watchers Sentiment which was reported at 55.5 points far above 48.6 points expected and compared to 42.1 in the previous reporting period.

In addition, the Bank Lending registered a 0.9% growth versus 0.7% expected. Unfortunately, the Average Cash Earnings rose by 0.2% versus 0.6% expected, while the Current Account was reported at 0.76T below 0.85T.

The USD/JPY pair is trading in the red as the US data failed to lift the price. The PPI registered a 0.6% growth in the last month as expected, while the Core PPI rose by 0.4% less compared to 0.5% forecasts.   

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USD/JPY Forecast: Price Technical Analysis – Down Channel! 

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The pair drops within a descending pitchfork’s body. It has found support again on the median line (ml), but it has failed to close above the weekly S1 (112.97). The USD/JPY pair could drop deeper anytime as long as it stays below the descending pitchfork’s upper median line (uml). 

From the technical point of view, the 38.2% (112.56) is seen as the next downside target if the rate extends its drop. The price was expected to develop a downwards movement after making a breakdown from the triangle pattern.

Its failure to make new higher highs signalled a corrective phase. A larger downside movement could be activated by a valid breakdown below the 38.2% level.

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