Key Highlights
· The US dollar after a monstrous rally against the Japanese yen found sellers at 113.80-114.00.
· There was a crucial bullish trend line on the 4-hours chart of USD/JPY, which was broken at 112.50 to ignite a downside move.
· Today in Japan, the Unemployment Rate from the Ministry of Health, Labour and welfare posted no change from 3% in Oct 2016.
· The Japanese Overall Household Spending released by the Ministry of Internal Affairs and Communications posted a decline of 0.4% in Oct 2016.
USD/JPY Technical Analysis
The US dollar was in a solid uptrend against the Japanese yen, as it traded above 113.00. However, the USD/JPY pair faced sellers near 113.80-114.00, and currently correcting lower. We need to analyze whether the current correction is a ‘proper correction’ or a change in the trend.
Looking at the 4-hours chart of USD/JPY, there was a crucial bullish trend line. It was holding the bullish trend until sellers managed to break it. After the break, the pair traded as low as 111.37.
The pair is once again moving higher, but the same trend line is acting as a resistance and preventing an upside move along with the 50% Fib retracement level of the last drop from the 113.89 high to 111.37 low. If the pair continues to face sellers, there is a chance of further declines and a short-term bearish trend for the dollar to yen.