USD/JPY could extend the corrective phase February 16, 2017

The USD/JPY dropped sharply today and looks motivated to reach fresh new lows today, could touch the 113.00 psychological level till the end of the day. The minor rebound is completed because the rate was rejected by a static resistance, now is approaching an important dynamic support, technically is expected to take out this downside obstacle and could drop further.

The pair has dropped because the USD was punished by the USDX’s amazing drop, the index has fallen below the 100.50 psychological level and could reach the 99.84 static support in the coming days, a further drop will force the greenback to lose more ground versus its counterparts.

The Yen has rallied today versus its rivals as the Nikkei stock index has plunged aggressively after the failure to approach and reach the 19700 psychological level, has closed the Monday’s drop and looks motivated to touch new lows in the coming days, so the Yen could increase further.

The greenback has decreased somehow surprisingly today because the United States economic data have come in better, the Building Permits have increased from 1.23M to 1.29M in January, exceeding the 1.23M estimate, has reached the December 2015, while the Housing Starts indicator has come better versus the economists estimate, was reported at 1.25M, higher than the 1.23M forecast. The Unemployment Claims have increased a little from 234K to 239K in the previous week, the economists had expected an increase to 243K, moreover the Philly Fed Manufacturing Index has increased from 23.6 to 43.3 points, beating the 18.5 estimate. You can see that we had positive data from the US, but the dollar wasn’t impressed.

The price has found strong resistance at the 23.6% retracement level and now is approaching the second warning line (wl1) of the former ascending pitchfork, will ignore this dynamic support if the Nikkei stock index will decrease further in the coming days. Could find support again at the 38.2% retracement level, a drop below this level will attract even more sellers, the rate remains under selling pressure on the short term after another failure to break above the warning line (WL2).

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