The USD/CAD currency pair on Friday plunged to a new 2-month low of about 107.980 after the latest US ISM manufacturing data missed estimates. The currency pair has been on a downward movement since late last month which comes off a multiple-top reversal pattern formation.
The Japanese Yen appears to have fully capitalized on the disappointing US data to wipe out more than two months’ worth of gains from the greenback.
USD/JPY Fundamentals Overview
From a fundamental perspective, the USD/JPY currency pair is trading at the back of a major news event following the latest round of US economic data. On Friday, the US ISM Manufacturing PMI for December missed the expectation of 49 with 47.2 edging lower from the previous reading of 48.1.
On the other hand, the ISM Prices Paid beat the expectation of 47.5 with 51.7 while Construction Spending for November impressed with (MoM) change of 0.6% versus the consensus estimate of 0.3%. The ISM-NY Business Conditions Index for December edged lower to 39.1 down from 50.4 in the previous month.
On Thursday, the US initial jobless claims for the week ending December 27 beat the expectation of 225k with 222k while the continuing claims for the preceding period were higher than expected with 1.728M versus 1.719M.
USD/JPY Technical Analysis (the 60-min Chart)
Technically, the USD/JPY currency pair appears to be trading under intense selling pressure, which indicates a short-term bearish bias in the market sentiment. The currency pair dropped to oversold levels of the RSI indicator on the 60-min chart on Friday before making a late climb but still remains under pressure from the bears.
Therefore, the bears will be targeting short-term profits at around 107.906, 107.801 or lower at 107.676. On the other hand, the bulls will hope that high selling can trigger some bullish momentum as the shorts rush to cover their positions. As such, they could target profits at around 108.104, 108.202 or higher at 108.286.
USD/JPY Technical Analysis (the Daily Chart)
In the daily chart, the USD/JPY currency pair appears to have recently made a bullish reversal within a descending curve, which indicates an attempt by the bulls to take control of the bears amid bearish dominance. The currency pair is now pegged closer to the 100-day and the 200-day SMA lines which indicates a case of short-term consolidation.
This could lead to a major pullback in the pair thereby creating long-term bearish opportunities at around 107.045, 106.379 or lower at 105.300. On the other hand, the bulls will target profits ta around 108.851, 109.724 or higher at 110.609.