Key Highlights
- The US Dollar started a downside correction from 111.37 and declined below 110.00 against the Japanese Yen.
- There was a break below a key bullish trend line with support at 110.05 on the 4-hours chart of USD/JPY.
- The US Initial Jobless Claims for the week ending May 19, 2018 rose from the last revised reading of 223K to 234K.
- Today in the US, the Durable Goods Orders figure for April 2018 will be released, which is forecasted to decline 1.4%.
USDJPY Technical Analysis
The US Dollar started a downside move after topping around the 111.35 level against the Japanese Yen. It seems like the USD/JPY pair has started a major correction and it could extend declines below 110.00.
Looking at the 4-hours chart, the pair declined from 111.37 and moved below the 50% Fib retracement level of the last wave from the 108.64 low to 111.37 high. More importantly, there was a break below a key bullish trend line with support at 110.05 on the 4-hours chart.
The pair also broke the 100 simple moving average (red, 4-hour) and 109.80. It almost tested the 76.4% Fib retracement level of the last wave from the 108.64 low to 111.37 high.
The current price action suggests that the pair broke a key support near 110.00, which may now act as a resistance. If the pair moves back above 110.00, it will most likely resume its uptrend. On the downside, a break below 109.30 and 109.20 could push the pair towards 108.80.
Recently in the UK, the Initial Jobless Claims for the week ending May 19, 2018 was released by the US Department of Labor. The market was looking for a decline in claims from 222K to 220K.
However, the result was disappointing as there was a rise in claims to 234K. Moreover, the last reading was revised up to 223K. The report added:
The previous week’s level was revised up by 1,000 from 222,000 to 223,000. The 4-week moving average was 219,750, an increase of 6,250 from the previous week’s revised average. The previous week’s average was revised up by 250 from 213,250 to 213,500.
Overall, the 110.00 level holds a lot of importance for USD/JPY in the near term. A daily close above 110.00 may perhaps push the pair towards 111.00.
Economic Releases to Watch Today
- German IFO Business Climate Index for May 2018 – Forecast 102.0, versus 102.1 previous.
- UK GDP for Q1 2018 (Preliminary) – Forecast +0.1% (QoQ) versus +0.1% previous.
- US Durable Goods Orders for April 2018 – Forecast -1.4% versus +2.6% previous.
