The USD/JPY currency pair on Monday continued to trade in a consolidative pattern formation edging lower below 109.400 ahead of Christmas. The currency pair has lacked steam over the last week to gains from the prior week but still remains relatively close to the current multi-month highs of about 109.724.
The currency pair is now experiencing pressure from both the bulls and the bears as it traded between the 100-hour and the 200-hour SMA lines forming a convergence.
The USD/JPY Fundamentals Overview
From a fundamental perspective, the USD/JPY currency pair is trading ahead of a relatively calmer period in the US market due to the Christmas holiday celebrations. This is likely to give the Japanese Yen an edge over the US dollar in the short-term, which also explains the lack of momentum in the currency pair this week.
Nonetheless, there will be some data trickling through. On Monday, Japan’s all industry activity index for October missed the expectation of 0.2% (MoM) change with -4.3% while the leading economic index also came short of 91.8 with 91.6 basis rating. However, the Coincidence Index beat the expectation of 94.8 with a 95.3 basis points rating.
In the US, the Chicago Fed Nationa Activity index beat the expectation of -0.09 with 0.56 while durable goods orders ex-defense for November impressed with a 0.8% change versus 0.0%. On the other hand, durable goods orders ex-transportation missed with 0.0% versus 0.2% while the overall durable goods orders disappointed with -2.0% change versus an expectation of 1.5%.
USD/JPY Technical Analysis (the 60-min Chart)
Technically, the USD/JPY currency pair appears to be trading in a consolidative sideways channel off an ascending channel, which shows that bull-run might have run out of momentum.
Therefore, the bears will be targeting pullback profits at around 109.288 or lower at 109.195 going into Christmas. On the other hand, the bulls will be looking for a continuation of the bull-run towards 109.497, 109.602 or higher at 109.724.
USD/JPY Technical Analysis (the Daily Chart)
In the daily chart, the USD/JPY currency pair still appears to be experiencing high volatility in a slight;y descending channel. However, the currency pair has been on a bull-run since August as the bulls look to retake long-term control going into the tail-end of the year.
Therefore, the bulls will be targeting long-term profits at around 110.609 or higher at 111.754. On the other hand, the bears will hope for a quick pullback towards 108.505, 107.443, or lower at 106.379.