USD/JPY Forecast – US Dollar Could Extend Declines Vs Japanese Yen

USD/JPY Forecast – US Dollar Could Extend Declines Vs Japanese Yen

  • – The US Dollar failed to move above the 110.90 level and declined against the Japanese Yen.
  • – There was a break below a short-term contracting triangle with support at 110.50 on the hourly chart of the USD/JPY pair.
  • – Recently in Japan, the Merchandise Trade Balance Total figure for May 2018 was released by the Ministry of Finance.
  • – The outcome was below the market forecast of ¥-235.0B as there was a trade deficit of ¥-578.3B.

 

Japan’s Merchandise Trade Balance

Recently in Japan, the Merchandise Trade Balance Total figure for May 2018 was released by the Ministry of Finance. The market was positioned for a trade deficit of ¥-235.0B in May 2018, compared with the last surplus of ¥626.0B.

 

The actual result was below the market forecast of ¥-235.0B as there was a trade deficit of ¥-578.3B. Imports of goods and services in May 2018 increased 14.0% compared with the forecast of +8.2%. Moreover, the Exports of goods and services in May 2018 increased 8.1% compared with the forecast of +7.5%.

 

The USD/JPY pair is currently trading near the 110.50 level and it seems like there is a risk of a downside move in the near term.

 

USD/JPY Technical Analysis

The US Dollar traded towards the 111.00 level recently against the Japanese Yen. The USD/JPY pair almost tested the 110.00 level and formed a high near 110.90. Later, there was a downside reaction and the pair declined below the 110.80 and 110.60 levels.

 

USD/JPY Technical Analysis US Dollar Japanese Yen

 

During the decline, there was a break below the 50% Fib retracement level of the last wave from the 109.91 low to 110.90 high. There was even a break below the 110.50 pivot level. However, the decline was protected by the 110.30 level.

 

Moreover, the 61.8% Fib retracement level of the last wave from the 109.91 low to 110.90 high also acted as a support. The pair is currently recovering, but it seems like upsides might be capped by the 110.60 and 110.70 resistance levels.

 

If there is a failure to move past 110.70, there could be a downside reaction. Supports on the downside are around 110.30 and 110.10, followed by 110.00.


Also published on Medium.

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