USD Continues to Struggle Against the YEN Despite Strong US Retail Sales

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The USD continued to struggle against the Japanese Yen on Friday despite an impressive round of US retail sales. The USD/JPY currency pair continues to trade within a descending channel in the 60-min chart.

The pair is pinned slightly above the 100-hour SMA while the 200-hour SMA is a few levels above it. The currency pair made a slight rebound on Friday but quickly faced resistance from the bearish trendline.  It now appears to have resumed course on a previous sideways channel.

USD/JPY Fundamentals Overview

From a fundamental perspective, the USD/JPY currency pair is trading at the back of a relatively busier US market compared to the Japanese market. Earlier in the week, Japan’s producer price index for September missed the (MoM) expectation of 0.0% with a change of -0.2%. The (YoY) equivalent came short of -0.5% with -0.8%. Bank lending for the month grew slower than the expected (YoY) growth of 7.5% with 6.4%. However, machinery orders for August beat both the (MoM) and (YoY) expectations of -1% and -15.6%, respectively with 0.2% and -15.2%. Industrial production for August missed the expected (YoY) change of -13.3% with a change of -13.8%.

In the US, the consumer price index ex-food and energy for September missed the expectations of 1.8% with 1.7% (YoY). The (MoM) equivalent matched the expectation of 0.2%. On Friday, the Michigan Consumer Sentiment Index for October beat 80.5 with 81.2. The US retail sales control group for September outperformed 0.2% with 1.4%. Retail sales in general beat the (MoM) expectation of 0.7% with 1.9% while retail sales ex-autos beat 0.5% with 1.5% (MoM).

USD/JPY Technical Analysis (the 60-min Chart)

Technically, the USD/JPY currency pair appears to be trading within a descending channel in the 60-min chart. This indicates a short-term bearish bias in the market sentiment. The current movement appears to have pushed it to a previous pattern of a sideways channel.

The bulls will be targeting short-term profits at around 105.732 or higher at 106.006. On the other hand, the bears will target short-term pullback profits at around 50% and 38.20% fib levels at 105.134 or and 104.857, respectively.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the USD/JPY currency pair appears to be trading within a descending channel. This indicates a significant long-term bearish bias in the market sentiment. The pair is now pinned just above the 61.80% fib level on the way down. 

The bears will target long-term profits at around 104.260 or lower at 103.044. On the other hand, the bulls will look to pounce at around 50% and 38.20% fib levels at 106.405 and 107.622, respectively.

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