The USDJPY currency pair faced considerable turbulence following yesterday's US GDP news release, which fell short of expectations at 3.2% versus the forecasted 3.3%. This disappointment triggered a notable downturn in USDJPY, resulting in a breach of its ascending trendline support. The market's attempt to test resistance around 150 yen led to the formation of an evening star candlestick pattern, followed by consecutive bearish Marubozu candlesticks, signaling a swift bearish reversal.
As traders brace for today's economic events, core PCE and US initial jobless claims take center stage. Forecasts anticipate a dip in core PCE to 2.8% from the previous 2.9%, suggesting a potential slowdown in inflation and weakening the USD. Similarly, expectations for higher initial jobless claims could further weigh on the greenback, should the data exceed forecasts.
In the realm of technical analysis, indicators add to the bearish outlook for USDJPY. EMA 50 and 200 are inching closer to forming a death cross, a widely recognized signal of a strong bearish reversal. The downward trajectory of both EMAs underscores substantial bearish pressure on the currency pair. Additionally, the volume profile indicator reveals significant bearish sentiment as USDJPY trades well below the value area, indicating a strong preference for selling pressure.
Expanding Bollinger Bands further highlight the robust bearish momentum, with prices positioned at the lower band. The widening gap suggests continued downward pressure on USDJPY. Moreover, oscillator indicators confirm the prevailing bearish trend, with MACD signaling below the zero line and RSI below the 30% level, despite the current rebound in prices.
In summary, USDJPY remains firmly bearish, with limited upside potential. Today's economic releases could exacerbate the downward pressure, particularly if they fall below expectations. Traders should remain vigilant for further bearish signals amidst the challenging market environment.
Forecast 2.6% vs Previous 2.9%
Forecast 2.8% vs Previous 2.9%
Forecast 209K vs Previous 201K
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