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The upside rally that was prevailing since the August finally came to an end on October 6. During the period, the price surged to 110.00, the August 2008 high and the psychological number. The bullish wave was backed by high economic growth of the US. The trend was broken down after the FED expressed its dovish concerns about the delay in rate hike.
The bearish wave continued till Monday when the Japanese Yen turned bearish following the release of the Domestic Corporate Goods Price Index. The retracement happened around 106.782, the 38.2% fib level. The unfavorable data created a room for the US Dollar's bulls to recover again.
The pair opened the Asian session at 107.04. As of this writing, the pair is being traded around 107.37 trying to breach the resistance around 107.45. If the pair succeeded then it may test the next resistance around 108.28, the 23.6% fib level. On the downside, there lies a support around 105.75, the 50% fib level and 104.75, the 61.8% fib level.
Fundamental analysis
Today, we can see three economic releases for the Japan. These include:
Industrial Production:
The industrial production of the Japan is slashed to -3.3% this September as compared to the -0.7%, the previous month. Released by Ministry of Economy, Trade and Industry, this reading has ticked the JPY down against its counterpart currencies.
Capacity Utilization:
The Capacity Utilization of the Japan this September is recorded at -1.7%, lower than that of the previous month (-0.8%). As an indication of growth in Japanese economy, the high reading is considered bullish, while the low reading is considered bearish for the Japanese yen.
US Retail Sales:
US Retail Sales is one of the most important releases scheduled today. The forecasted figure for this September remained at -1.0%, lower than that of the previous month (0.6%). Released by US Census Bureau, a high reading is bullish while a low reading is bearish for the US dollar. The US dollar may go bearish if the actual outcome is below than expected.
Trading strategy
In the light of technical and fundamental analysis, it is better to stay cautious ahead of US retail sales release. However, long positions can only be sought for short-term.
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