In our USDJPY forecast today we see the pair dropping aggressively in the past few hours and is now pressuring the weekly pivot point (110.53).
The price has reached a strong resistance area, so a temporary decline is only natural. After rallying earlier in the session, the pair is falling in tandem with the dollar index (DXY), which has slipped lower and the JP225 (Nikkei) which plunged in the equities session.
Japan unemployment and sales data up next
Japan is to release its Unemployment Rate tomorrow, which is expected to increase from 2.8% to 2.9%, while the Retail Sales could increase by 7.9% versus 11.9% growth registered in the previous reporting period.
The Japanese economy has been an outlier among the advanced economies, with deflation still stalking the scene and the economy failing to match the vigour of the bounceback being seen in the US and to some extent Europe too.
It remains to be seen how the pair will react during the week as over in the US we will see the publishing of the Non-Farm Payroll, Unemployment Rate, and the Average Hourly Earnings data on Friday. There is a possibility that the US dollar might slip lower ahead of these high-impact events.
USDJPY Forecast: technical analysis
USD/JPY has found strong resistance right above the 110.96 static resistance (higher high) and is currently pressuring the weekly pivot point (110.53 ). Falling yet further or stabilizing below this downside obstacle could indicate a deeper decline in the short term as selling pressure builds.
The major downside target remains at the uptrend line. The 110.32 to 110.19 region is seen as a support zone, so there may only be a temporary decline.
Alternatively, if the price were to stay maintain a position above the weekly pivot point, it could signal that USD/JPY may be about to turn higher soon.
An upside continuation will be confirmed by a valid breakout above the 110.96 level. Our forecast suggest there will be a bearish reversal only if USD/JPY makes a decisive breakdown through the uptrend line.
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