USD/JPY is trading in the red right now, but only because the Nikkei and the USDX has slipped lower after the early morning. The pair could come down to test and retest a support level before will climb much higher. Technically is still under some selling pressure on the Daily chart because is trapped within a descending channel.
A minor retreat could be natural after the amazing rally, the Yen could increase as the JP225 could decrease a little as well. The Nikkei stock index has managed to jump through a confluence area, signaling that the bulls are in full control. Now could come to retest the broken confluence area, a valid breakout will accelerate the rally.
A further Nikkei’s drop will force the Yen to drop further versus its rivals, so the USD/JPY could climb much higher in the upcoming period.
The Japanese PPI has disappointed in the morning, has managed to increase by 2.9% in August, while the BSI Manufacturing Index increased to 9.4 points, beating the 4.8 estimate. The greenback needs serious support from the United States economy, the PPI is expected to increase by 0.3%, while the Core PPI by 0.2%. The USD could increase if the figures will come in better than expected.
Price has rallied and now is trading above the 50% retracement level. Could come down to retest this level in the upcoming days if the Nikkei will slide further. You can see that is still trapped within the WL3 and the WL2 of the major descending pitchfork, so only a valid breakout above the WL3 will confirm a further increase towards the 23.6% retracement level. However, a rejection from the WL3 will send the rate tumbling on the short term.
Right now is trading near a resistance area, that’s why it could decrease again on the short term. Right now is better to stay away from this pair because we don’t have any trading opportunity, but I hope that we’ll have one very soon.