The USD/JPY currency pair rebounded on Friday after falling early in the day. The pair had dropped to trade at 107.026 before recovering late on to end the week at 107.310.

The currency pair has been trading within a descending wedge since late April of this year and this trend appears set to continue through next week. The pair’s current short-term bearish bias appears to have been triggered by a series of US economic events that suggest a potential weakness in the US economic growth.

USD/JPY Fundamentals Overview

From a fundamental perspective, the USD/JPY currency pair is trading at the back of what has been a dovish weak in the US economic corridors with the Federal Reserve indicating that a rate cut this year is not out of the question.

This dovish comment follows up on the early events of this month where the US Jobs data missed expectations with 75,000 jobs versus a predicted count of 185,000. And to add more pressure to the already weakened greenback, trade tensions between the US and China continue to escalate with neither party willing to soften their stance.

Traders will be looking forward to Japan’s Leading Economic Index and the Consumer Confidence Index next week for a clear direction while the US 3-month and 6-month Bill Auctions will also be on the cards.

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

Technically, the USD/JPY appears to be well poised for both the bulls and the bears to profit. The Relative Strength Index Indicator is in the middle, which generally supports a continuation of the current bearish trend in the short-term.

As such, the bulls will target profits at around 107.580 going into next week while the bears will hope for a pullback towards the 107.026 level. Both the 100-hour and the 200-hour moving average lines indicate a continuation of downward pressure on the pair.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the USD/JPY currency pair appears to be trading within a slightly bullish wedge that has recently begun to turn bearish with a formation of a triangle at the end.

This suggests that the pair could be in the process of forming a short-term consolidation pattern, which could trigger a major breakout. The upward movement appears to be significantly limited and this suggests that the breakout could be bearish.

In summary, the USD/JPY currency pair appears to be experiencing a short-term bearish bias but the bulls will look to maintain control in the long-term subject to a potential bearish breakout.