The USD/JPY currency pair continues to trade in a consolidative triangle formation following the latest round of economic data. The pair appears to be lacking direction despite the latest developments in the US-China trade talks. This week, President Trump has threatened to impose tariffs on Chinese goods before on Friday hinting of a potential trade deal with China.
The currency pair is pegged between the 100-hour and the 200-hour SMA lines, below and above, respectively, which again supports the case of short-term consolidation.
USD/JPY Fundamentals Overview
From a fundamental perspective, President Trump has this week disrupted normal trading of the currency pair. The highly vocal Trump caused a market stir with his tweets after first threatening to impose more trade tariffs on Chinese goods amid a lack of progress in the trade talks with China. Then later he hinted about positive developments towards a potential trade deal.
In terms of economic data, the US preliminary Markit Manufacturing and Services PMIs beat expectations this week while the Composite PMI was in line with the forecast. Earlier in the week, the continuing jobless claims missed the forecast of 1.685M with 1.695M claims while the initial clams also came short of the expected claims of 219k with 226k.
On the other hand, in Japan, the National CPI ex-food and energy for October beat the expected change of 0.5% with 0.7% (YoY) while the national CPI ex-fresh food was in line with the forecasted change of 0.4%. The overall national CPI missed the expectation of 0.3% with 0.2%.
USD/JPY Technical Analysis (the 60-min Chart)
Technically, the USD/JPY continues to trade in a consolidative triangle pattern, which could trigger a major breakout in the pair. The pair has recently bounced off the upper resistance boundary and remains several levels above the support boundary line. This gives the bears short-term control going into next week.
Therefore, the bears will be targeting short-term profits at around 108.500 or lower at 108.348 while the bulls will hope for a breach to occur thereby creating bullish opportunities at around 108.750 or higher at 108.938.
USD/JPY Technical Analysis (the Daily Chart)
In the daily chart, the USD/JPY currency pair still appears to be enjoying a strong bullish run in a bid to recover from the April-August plunge. The currency pair has now crossed the 50% Fib level and is hugging the support trendline of the ascending channel. This gives the bulls control in the long-term market going into next week.
Therefore, the bulls will target long-term profits at around 109.395, 110537, or higher at 111.133 while the Bears will hope for a breach of the support trendline downwards by targeting profits at around 107.463, 106.379, or lower at 105.300.