The USD/JPY decreased today and has signaled an exhaustion on the short term. The Yen has taken the lead versus the greenback as the Nikkei stock index plunge after the impressive rally and erased the morning gains. The pair has retreated after the yesterday’s impressive rally, we’ll see what will happen in the upcoming days because the USDX could weaken the USD.

I’ve said in the previous days that a USDX’s drop will signal a Nikkei’s drop as well, the dollar index has reached the 93.81 static resistance, but failed to jump above it or to close near this major horizontal obstacle.

The Yen increased today, even if the Japanese data have disappointed, the Trade Balance was reported at 0.24T, much below the 0.31T estimate and versus the 0.31T in the former reading period, while the All Industries Activity increased only by 0.1%, less versus the 0.2% estimate.

I’ve added the USDX’s chart to show you why the USD could lose more ground versus its rivals in the upcoming days. You can see that has made a false breakout above the minor sliding line (sl) of the ascending pitchfork and failed to close near the 93.81 static resistance, signaling that we may have a drop towards the 92.77 previous low and towards the 92.49 static support.

The dollar index could still develop an Inverse Head and Shoulders pattern on the short term as long a the rate stay above the 92.49 obstacle.

You can see that the price dropped after the yesterday’s significant increase, it could move sideways on the short term before will really decide what to do next. The rate was expected to climb much higher after the failure to retest the 38.2% retracement level, the next upside target will be at the median line (ml) of the black ascending pitchfork and at the 23.6% retracement level, could reach these obstacles only if the USDX and the Nikkei will climb much higher.

A failure to reach the median line (ml) will send the rate towards the 250% Fibonacci line (ascending dotted line), I’ve said in the previous weeks that the rate will ignore this support if will approach it.