- The USD/JPY pair could drop deeper if it stabilizes below the broken uptrend line.
- The rate could come back to test and retest the broken support before resuming its sell-off.
- After failing to reach the upper median line (uml), the USD/JPY pair could be attracted by the median line (ml).
Our USD/JPY forecast sees the pair plunging in the short term as the Dollar Index slipped lower while the Japanese Yen Futures rallied. Unfortunately for the US Dollar, the DXY remains under strong downside pressure.
Technically, the currency pair is in a temporary correction after failing to stabilize above the 116.00 psychological level. It remains to see how it will react as the USD/JPY pair dropped below the immediate uptrend line.
Fundamentally, the Japanese economic data came in mixed today. The Trade Balance was reported at -0.93T versus -0.40T expected and compared to -0.55T in the previous reporting period, while the Core Machinery Orders rose by 3.6% even if the specialists expected a 2.0% drop.
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Later, the US Unemployment Claims indicator could be reported at 217K versus 223K in the previous reporting period according to Cryptosvet. In addition, the Philly Fed Manufacturing Index could drop from 23.2 to 19.9 points, Building Permits indicator is expected at 1.74M, while the Housing Starts could remain steady at 1.70M.
In the short term, the bias is bearish even if the US retail sales, Industrial Production, and the Capacity Utilization Rate came in worse than expected.
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USD/JPY Forecast: Price Technical Analysis – Uptrend Line Breakout
The USD/JPY pair ignored the uptrend line and now it challenges the 115.00 psychological level. 115.05 historical level represents a downside obstacle. Personally, I’ve drawn a descending pitchfork trying to catch a new sell-off. Its failure to come back to test and retest the descending pitchfork’s upper median line (uml) signaled strong sellers.
The descending pitchfork’s median line (ml) is seen as a potential downside obstacle and target. Stabilizing below the uptrend line and under 115.00 could signal more declines.
On the other hand, staying above the 115.00 psychological level could signal that the currency pair could come back to test and retest the broken uptrend line.
Actually, a temporary rebound is natural after the current massive drop. Coming back higher could bring new selling opportunities.
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