USD/JPY Extends Weekly Gains on Positive Nondefense Capital Goods Orders

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The USD/JPY currency pair on Friday extended the current weekly rally towards 105.725 after the latest round of US durable goods data. The currency pair is on recovery after bouncing off 6-month lows of about 104.000 at the start of the week. 

It has now surged to move closer to the 76.40% Fib level after this week’s sustained rally. The currency pair is pinned above the 100-hour and the 200-hour SMA lines in the 60-min chart. A late pullback on Friday prevented it from crossing to overbought levels of the 14-hour RSI.

USD/JPY Fundamentals Overview

The USD/JPY currency pair is trading at the back of a relatively busy period in the US market. On the contrary, the Japanese market has been relatively quiet apart from a few speeches and announcements from the BoJ. On Wednesday, Japan’s all industry activity index for July missed the (MoM) expectation of 3.3% with a change of 1.3%. And on Thursday. The corporate services price index for August came short of 1.4% (YoY) with a change of 1%.

In the US, durable goods orders for August missed the expectation of 1.5% with a change of 0.4%. Durable goods orders ex-transportation also missed the consensus market estimate of 1.25 with 1.4% while durable goods orders ex-defense beat 0.1% with 0.7%. On the other hand, nondefense capital goods orders ex-aircraft outperformed the expectation of 0.5% with a change of 1.8%. Earlier in the week, the US housing price index for July beat the (MoM) expectation of 0.5% with 1%. The preliminary Markit Manufacturing PMI for September beat 53.2 with 53.5 while the Services PMI missed 54.7 with 54.6.

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

Technically, the USD/JPY currency pair on Friday continued to add gains to the current weekly rally climbing towards 105.725. The pair is now pinned just below the 76.40% fib level after the late pullback. 

The bulls will be targeting short-term profits at around 76.40% Fib level at 105.725 or higher at 105.995. On the other hand, the bears will look to pounce for profits at around 61.80% and 50% Fib levels at 105.385 and 105.114, respectively.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the USD/JPY currency pair continues to trade within a sharply descending channel forming inside a slightly descending bigger channel. This indicates a relative increase in the bearish bias in the market.

The bears will look to retain long-term control of the pair by targeting profits at around 104.493 or lower at 102.542. On the other hand, the bulls will target profits at around 106.617 or higher at 108.520.

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