Weekly Idea: – Positional Call:-
Sell above 109.85, Stop loss above 110.74, Target- 107.80
1- Technical Views- USD/JPY Daily outlook
The USD/JPY pair has fallen to 109.42 after flirting with December high at the opening, confined to a 30 pips’ range this Thursday. The pair fell on broad dollar’s weakness, although the optimism that weighed lower the greenback also prevented the JPY from appreciating.
Japanese data released overnight came in mixed, as December Tokyo inflation beat the market’s expectations, up to 0.9% YoY. The core reading ex-fresh food resulted at 0.8%, above the 0.6% expected. The November unemployment rate in the country decreased to 2.2%, also better than expected, but Retail Trade fell by 2.1% YoY in November. Also, the preliminary estimate of November Industrial Production resulted much worse than anticipating, plummeting 8.1% YoY.
The USD/JPY pair is trading at the lower end of its daily range, neutral in the short-term. The 4- hour chart shows that the price hovers around a directionless 20 SMA, while technical indicators head nowhere, stuck around their midlines. The downside is being protected by buyers aligned around 108.90, while the pair needs to advance beyond 109.70 to become attractive for bulls.
USD/JPY has been grinding higher for a while now but it seems momentum is wearing thin. There is now an ascending wedge formation on the daily chart below. The price has also taken out both moving averages and they could act as support. 110.00 is the main resistance point now as a break would make a new higher high wave. The RSI is also in positive territory but is starting to turn lower.
USD/JPY Weekly outlook
In favor of reducing the pair Dollar/Yen, a test of the resistance line on the relative strength index (RSI) will
come out. The second signal will be a rebound from the upper boundary of the downward channel. Cancellation of the fall of the USD/JPY pair in the current trading week December 30, 2019 — January 3, 2020, will be a strong growth and the breakdown of the 111.55 area. This option will indicate a breakdown of the resistance area and the continued growth of the Forex pair to the area above the level of 113.95. A confirmation of the fall for the pair USD/JPY will be a breakdown of the lower boundary of the Wedge model and closing below 108.55.
USD/JPY Forecast December 30, 2019 — January 3, 2020 implies an attempt to test the resistance level near the area of 110.25. Where can we expect the pair to continue falling to the area below the level of 105.75? An additional signal in favor of reducing will be a test of the trend line on the relative strength index (RSI). Cancellation of the fall option will be a strong growth and the breakdown level of 111.55. This will indicate a continued rise of the pair with a potential target above the area of 113.95.
– Fundamental Overview-
- US Dollar Index steadies above 97 in American session.
- Wall Street’s main indexes post modest gains in early trade.
- Macroeconomic data releases from Japan paint a mixed picture.
- Japanese data was mixed, with inflation improving but Industrial Production collapsing.
- USD/JPY neutral in the short-term, risk skewed to the upside.
- As holiday trade kicks in USD/JPY stalls ahead of 110.00.
- The pair has been grinding higher as stocks make new highs.
- USD/JPY finds a floor amid trade deal optimism.
- The yen buoyed by BOJ’s stimulus view and firmer Japanese CPIs.
- Dollar index extends weakness amid light trading conditions.
- USD/JPY has failed again to chew through offers around 109.70.
- A pullback looks likely with the BOJ ruling out more stimulus.
- USD/JPY extends pullback amid upbeat data from Japan.
- Optimism surrounding the US-China trade deal, increasing odds of BOJ’s sustained support for easy
money keep the pair firm.
- Trade/political headlines will entertain investors amid the year-end sparse trading.