USD/JPY Pulls Back Off Multi-Month Highs to Bottom at 109.409

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The USD/JPY currency pair on Friday pulled off new multi-month highs of about 109.649 to bottom at around 109.409 following the latest round of economic data.  The currency pair has been on a bullish run since late last week but now, that run appears to be facing strong resistance just below 109.650.

The currency pair has since pulled off overbought levels of the RSI indicator in the 60-min chart following Friday’s pullback.

USD/JPY Fundamentals Overview

From a fundamental perspective, the currency pair appears to be riding on the back of the latest round of US economic data. In Japan, nothing of note has come out to propel the Yen against the US dollar.

On Monday, Japan’s leading economic index missed the expectation of 92.2 with 91.9 for September while retail trade data also came short. Large Retailers’ Sales posted a decline of 8.2% for October versus a predicted growth of 1.2%. The (YoY) Industrial Production change also came short of estimates after falling by 7.4% versus an expected growth of 1.9%.

However, Jobs/Applicants ratio (Oct) beat the expectation of 1.56 with 1.57, the Tokyo Consumer Price Index also impressed with 0.8% versus 0.4% (YoY) for November while Tokyo CPI ex-Food and Energy beat the expectation of 0.6% (YoY) (Nov) with 0.7%.

On the other hand, the US initial jobless claims, continuing claims, and Durable Goods orders beat all fronts to add to the impressive annualized quarterly GDP growth of 2.1% which beat the expected growth of 1.9%.

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

Technically, the USD/JPY currency pair appears to be trading within an ascending channel, which indicates short-term bullish bias in the market sentiment. The currency pair has recently completed an ABCD impulse wave pattern which triggered today’s pullback after facing strong trendline resistance.

Therefore, the bears will be targeting short-term profits at around 109.191 going into the new week while the bulls will hope that the pair can rebound and head up towards the trendline resistance by targeting profits at around 109.650.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the USD/JPY currency pair continues to trade in a sharply rising channel, which again indicates the existence of intense bullish pressure in the long-term market sentiment. The currency pair has recently come close to touching the overbought boundary line but still appears to have enough momentum to take it well into overbought levels.

Therefore, the bulls will be targeting long-term profits at around 109.939, 110.517, 111.133 or higher at 111.754. On the other hand, the bears will hope for a major reversal in the trend by targeting profits at around 108.961, 108.503, 107.443 or lower at 106.922.

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