USD/JPY: Watch To The Downside

The US dollar traded lower against the Japanese Yen during the last week, as the USD/JPY pair traded towards the 101.40 level. There is a bearish continuing divergence forming on the monthly chart for the pair, which means the pair can drop close to the monthly 20 moving average. So, searching for possible sell opportunities seems a good idea in the medium term.

USD/JPY_1

There is a monster support at around the 101.20 level. If the pair breaks and closes below this level, then once the pair re-tests the broken support zone we can jump into a sell trade. This scenario is highlighted in the chart below. Alternatively, as long as the pair is trading below the 102.50/80 levels, then one may look to enter into a sell trade on every major rally. Remember, the pair should hold the mentioned levels for this scenario to be valid.

USD/JPY_2

Initial target should be around the 100.00, and final target could be around the 99.10 level. Stop should be placed above the broken support zone in the first scenario, and above the 102.80 level in the second scenario.

Major events scheduled in the upcoming week

The FOMC meeting minutes were released during the past week, which turned out to be a game changer for the US dollar. The minutes provided no hints for the interest rate hike, which did not go down well with the dollar buyers, and as a result pairs such as EURUSD, GBPUSD and AUDUSD traded a lot higher. However, better than expected US PPI data on last Friday helped the US dollar to recover some ground. In the coming week it would be interesting to see how the US dollar trades, and will there be any new low for in the dollar against the Euro and the British pound. There are handful of economic releases scheduled during the upcoming week, which could ignite volatility in the market.

Events To Watch

• Sunday – Singaporean GDP data.
• Monday – Chinese New loans data, Euro zone industrial production data, US retail sales data and RBA monetary policy meeting minutes.
• Tuesday – Swiss PPI data, UK CPI data, German ZEW economic sentiment, US CPI data, Fed chairman Yellen’s speech, New Zealand’s CPI data and Chinese GDP figures.
• Wednesday – UK employment data, Euro zone CPI data, US building permits data, US housing starts data, BOC interest rate decision, Fed Chairman Yellen’s speech and Fed beige book.
• Thursday – German PPI data, Canadian CPI data, US initial jobless claims and Philadelphia fed manufacturing index.
• Friday – Holiday – Good Friday.

This analysis is taken from Weekly Market Forecast, which also includes trade opportunities on: EUR/USD, GBP/USD, USD/CAD, EUR/GBP, EUR/CHF, NZD/USD, EUR/CAD, Gold, Crude Oil and INDICES.

Happy trading friends!