USD/JPY Forecast – Dollar To Yen Bullish Trend Exhausted
- – The US Dollar after trading as high as 114.58 against the Japanese yen found resistance.
- – The USD/JPY trend looks exhausted, as it broke a support trend line at 114.40 on the hourly chart.
- – The Japanese Services Purchasing Managers Index (PMI) for Feb 2017 released by Markit Economics posted a decline from 51.9 to 51.3.
Japanese Services PMI
Earlier today in Japan, the Services Purchasing Managers Index (PMI) for Feb 2017 was released by Markit Economics. The market was expecting no major decline in the PMI from 51.9 in Feb 2017.
The outcome was neutral, as there was a minor decline from the last PMI reading to 51.3 in Feb 2017. Commenting on the Services PMI, an economist at HIS Markit, Samuel Agass, stated “Japan’s service sector continued to grow during February, albeit at the weakest pace for four months. However, this did not stop firms from adding to their headcounts at the quickest extent since May 2013”. The Japanese CPI reading was also published today, which posted a good increase of 0.4% in Jan 2017 (YoY), more than the last +0.3%.
The Japanese yen seems to be gaining ground after the release, and already moved higher by around 20 pips against the US Dollar.
USD/JPY Technical Analysis
The US Dollar was seen gaining pace this week, as it traded above 114.50 against the Japanese yen and traded as high as 114.58. The USD/JPY pair later started correcting lower, and moved below a support trend line at 114.40 on the hourly chart.
It looks like the pair broke an ascending channel, and might be heading towards the 23.6% Fib retracement level of the last wave from the 111.68 low to 114.58 high. However, there is a major support on the downside at 113.60.
The 113.60 support was a resistance earlier, and might act as a support going forward. It also coincides with the 38.2% Fib retracement level of the last wave from the 111.68 low to 114.58 high. Overall, it looks like the USD/JPY pair is under a correction mode, and might trade towards 113.60 where the USD bulls could appear again to protect losses.
