USD/JPY Awaits Bearish Momentum Ahead Of Strong GDP Data
The US Dollar (USD) extended downside movement against the Japanese Yen (JPY) on Monday, dragging the price of USDJPY to less than 125.30 following the release of Japan’s trade and GDP data. The technical bias already remains bullish due to higher highs on the daily chart.
Technical Analysis
As of this writing, the pair is being traded near 125.55. Opened at 125.61, the pair tried to move high but facing a hurdle around 125.62, the pair moved down thereby dropping the price to 125.28. On upside, 125.85, the Friday 5th June high, is acting as an immediate resistance that is stopping the pair to move high. A break above the 125.85 resistance area could result in a new multi-year high, validating a move towards the 127.00 handle in long term.
On the downside, a strong support may be seen around 124.00, the 23.6% fib level and the psychological number, as demonstrated in the following chart. Breaking this support, the pair may move down to test the next support that lies around 120.63. The technical bias will remain bullish as long as the 118.25 resistance area, the lower low of last leg of Fibonacci is intact.
Japan’s Trade News
Japan’s trade balance is showing trade deficit as compared to the trade surplus in the previous month. Generally speaking, trade deficit is considered negative for the economy thus a worse than previous outcome has spurred short term bullish momentum in the price of USDJPY.
Japan’s GDP
Japan’s GDP for this quarter is reported as 1.0% better than that of the 0.6% in the previous month. Generally speaking, a high GDP reading is considered bullish for the Japanese yen and vice versa. The effect produced by this data is expected to cancel out the bearish impact produced by the japans bad trade data.
Trade Idea
Considering the overall technical and fundamental outlook, selling the pair around current levels appears to be a good strategy in short to medium term if we get a bearish pin bar or bearish engulfing candle on daily chart.