USD/JPY Surges to Top 108.800 After Bottoming at 108.250

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The USD/JPY currency pair on Friday extended Thursday’s recovery to top 108.800 after bottoming at 108.250 following the latest round of US data. The currency pair still appears to be trading under considerable bearish pressure with both the 100-hour and the 200-hour SMA lines just above it despite Friday’s resurgence.

The pair appears to have recently completed a head-and-shoulders reversal pattern that culminated with a major decline following the bullish run at the start of the month.

USD/JPY Fundamentals Overview

From a fundamental perspective, the USD/JPY currency pair is trading at the back of a busy period in both the US and the Japanese markets. In the US, the NFIB Business Optimism Index for last month missed expectations of 103.5 with 102.4. The seasonally-adjusted CPI also missed the expected points level fo 265.106 with 265.01. On the other hand, the general CPI beat the (YoY) forecast of 1.7% with 1.8% but missed ex-food and energy with 2.3% versus 2.4%.

And on Thursday’ the US PPI beat on all fronts including 1.1% versus an expectation of 0.9% (YoY) for October, and 0.4% versus 0.3% on (MoM) basis. The PPI ex-food and energy for the same month also beat the expectations of 0.2% (MoM) and 1.5% (YoY) with 0.3% and 1.6%, respectively.

On the other hand, Japan’s Industrial Production for September beat the expectation of 1.1% with a 1.3% (YoY) basis, while the (MoM) equivalent also outperformed the forecasted figure of 1.4% with 1.7%. Capacity Utilization for the same month posted a change of 1% up from -2.9% in the previous month, in the process beating the expectation of -0.6%.

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

Technically, the USD/JPY currency pair appears to be trading in a highly volatile ascending channel, which indicates a bullish bias in the market sentiment. The currency pair has recently bounced off the support trendline around 108.290 but then found strong resistance just below 109.000.

Therefore, the bears will be targeting short-term profits at around 108.641, 108.481 or lower at 108.290. On the other hand, the bulls will hope for a continuation of the current bull-run towards 108.952, 109.128, or higher at 109.276.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the USD/JPY currency pair continues to trade in an ascending channel following the latest rebound off the 104.413 key support back on August 26. The currency pair has recently pulled back after coming close to reaching the overbought levels of the RSI indicator on the daily chart.  

Therefore, the bears will be targeting long-term profits at around 107.443, 106.379, 105.300 or lower at 104.413. On the other hand, the bulls will hope for a continuation of the rebound towards 109.395, 110.537, 111.113, or higher at 112.421.

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