USD/JPY: Short Term Buying Opportunity?

Today we will discuss the trade opportunities for USD/JPY. The pair has been climbing higher from the last couple of weeks and currently facing a resistance at around 99.60/80 level. I think the pair has more room to the upside, and we should look for a short term buy opportunity.

There are two key support levels at around 98.80 and 98.60 as shown in the 4 hour chart below. If the pair drops lower around these levels, stops and holds above the support level and forms a bullish divergence on the 4 hour chart, then we may look to enter a buy trade.
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Alternatively, if the pair does not move lower, then we may look to buy with a break to the upside. There is flag forming on the hourly chart as shown below. If the pair moves higher, breaks the flag formation and the immediate resistance, then we will jump into a buy trade.
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Initial target should be around 100.40 and final target could be around the last high as shown in the daily chart below. Stop should be placed below the 100 moving average on the 4 hour chart for the first scenario and below the previous support for the second scenario.
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Reviewing yesterday’s events and trades
German and UK’s Inflation data release were the highlights of yesterday. German Inflation confirmed at 1.2% and Wholesale price index fell to -1.0% from 0.7%. EUR/USD gained some bids after the release, and the pair is currently trading back above 1.3400. On the other hand, UK’s inflation registered a decline from 2.7% to 2.2%. The market was expecting a drop to 2.5%. As a result, GBP/USD fell below the 1.5900 level and traded as low as 1.5854. Furthermore, RBNZ’s Wheeler in a speech yesterday mentioned about the possibility of the inflation pressure in the future for New Zealand and also re-iterated that the strong New Zealand dollar poses a threat to the economy.

Fundamental Outlook for the day
Today in the European session, UK’s employment data was released, which registered a decline in the unemployment rate from 7.7% to 7.6%. Furthermore, UK’s inflation report will be released in few minutes along with BOE’s Governor Mark Carney speech. The investors will be eying this event very closely in order to know about the rate hike prospects in the future. There is no major economic data release scheduled for the US today other than monthly budget statement. In the next Asian session, New Zealand’s retail sales data and Japan’s GDP figure will be released, which is expected to slow down 0.9% to 0.4%.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EUR/USD, EUR/AUD, EUR/GBP, NZD/USD, AUD/CAD, AUD/USD and GOLD.