USD/JPY Struggles for Direction in a Consolidative Sideways Channel

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The USD/JPY currency pair has failed to make any significant movements this week. The pair has traded in a tight sideways channel all week amid a lack of momentum. This is well supported by its central position in the RSI indicator in the 60-min chart. 

The 100-hour and the 200-hour SMA lines are also positioned too close to the pair. This indicates a consolidative pattern formation. Similar scenarios are traceable over the last couple of months.

USD/JPY Fundamentals Overview

From a fundamental perspective, the USD/JPY currency pair is trading at the back of a busy period in both markets. On Monday, Japan’s eco-Watchers Survey for January beat the expectation of 40.5 with 41.9. However, the outlook came short of expectations with 41.8 versus 47.1. And on Tuesday, the Money Supply M2+CD beat the (YoY) expectation for January with 2.8% versus 2.6%. 

On Wednesday, the January CPI beat the (MoM) expectation of 0.0% with 0.2%. The (YoY) change of 1.7% beat 1.5% expected. And on Friday, Tertiary Industry Index outperformed the (MoM) expectation for December with -0.2% versus -1.6%.

In the US, initial jobless claims for the week ending February 7 beat the expectation of 210k claims with 205k. Consumer Price Index ex-food and energy for January beat the (YoY) expectation of 2.2% with 2.3%. The (MoM) outcome was in line with expectations at 0.2%. On Friday, the retail sales control group for January missed the expectation of 0.3% with 0.0%. The preliminary Michigan Consumer Confidence Index for February outshone the expectation of 99.5 with 100.9.

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

Technically, the USD/JPY currency pair appears to be trading in a highly volatile cyclical wave. There are trackable repetitions, which make the pair interesting for swing traders. It now appears to be stuck close to the trendline resistance in a consolidative sideways movement. This could trigger the next downward movement ahead of next week.

Therefore, the bears will be targeting short-term profits at around 109.661 or lower at 109.451. On the other hand, the bulls will look to push the pair above the resistance trendline towards 109.981 and 110.180.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the USD/JPY currency pair appears to be trading in a bullish channel. This takes place in a highly volatile cyclical wedge. The pair has recently bounced off trendline support to surge towards the trendline resistance. It has since found strong resistance that could trigger the next pullback.

The bulls will be targeting long-term profits at around 110.287 or higher at 111.058. On the other hand, the bears will target pullback profits at around 109.056 or lower at 108.402.

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