USD/JPY Extends Gains Above 108.000 Ahead of US Retail Sales

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The USD/JPY currency pair appears to be capitalizing on the recent developments around the US-China trade wars after rallying to trade above 108.200. The currency pair topped a new 6-week high this week before pulling back to settle at around 108.100.

The currency pair continues to trade in an upward trending wedge after breaking through a key resistance zone at 107.00 late last week. The pair’s latest pullback came after it came close to hitting the overbought levels in the RSI indicator of the 60-min chart.

USD/JPY Fundamentals Overview

From a fundamental perspective, the USD/JPY currency pair is trading at the back of a busy week both in the US and Japanese markets. After beating expectations for the Consumer Credit Change with $23.29 billion the US economy missed the JOLTS Job Openings for July with 7.217M versus an expectation of 7.311M.

The Producer Price Index also beat expectations of 1.7% yearly change and 0.0% monthly change with 1.8% and 0.1% respectively. The PPI ex-food and energy were also impressive after delivering better than expected figures.

In Japan, the GDP for Q2 was in line with expectations but edged lower (QoQ) to 0.3% down from 0.4% in the previous quarter. The Annualized GDP also came in line with expectations after dropping from 1.8% to 1.3%.

The Japanese Producer Price Index for August also missed expectations in monthly and yearly changes with -0.9% and -0.3% versus forecasted figures of -0.8% and -0.2%.

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

Technically, the USD/JPY currency pair appears to be experiencing a short-term bullish bias as it trades within an ascending wedge. The pair recently bounced off the trendline resistance at around 108.249 and now seems headed towards the next support level at 107.842.

Therefore, the bears will be targeting short-term profits at 107.842, 107.608 or lower at 107.277. On the other hand, the bulls will target rebound profits at around 108.249 or higher at 108.517.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the USD/JPY currency pair appears to be trading under significant bearish pressure despite the recent rebound. The pair recently bounced off the key support level at around 105.800 after momentarily dipping to trade at 104.500. 

The USD/JPY is now facing resistance from the 100-day MA line but the bulls will still be optimistic going into next week and could target long-term profits at around 108.999, 109.926, 111.059 or higher at 112034. On the other hand, the bears will target pullback profits at around 107.101, 106.840 or lower at 104.493.

In summary, the USD/JPY currency pair appears to be experiencing a short-term bullish bias but in the long-term, the bears are still firmly in control.

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