Last week we saw USD/JPY dip and stay below the 102 handle, a level the market has been whipping above and below throughout the year. This latest bearish attempt followed a sharp downward revision in US Q1 GDP. With Q2 data underwhelming so far, the market is pushing back interest rate hike expectations for the FOMC. This is an soft-USD environment.
(usdjpy 1H chart, 6/30)
The USD/JPY ended last week in a consolidation. After a failed bullish attempt on Friday, it is starting this week with a similar failed attempt but this time followed by a stronger bearish push. The price action in the 1H chart shows that bears are in charge at least within the intra-session time-frame. The 100.76-100.85 low on the year and May low are likely going to be tested this week with the US NFP data looming on Thursday.
A break above 101.50 would reflect consolidation this week. However at least a break above 102 will be needed to convince traders to go against last week bearish shift. This basically puts USD/JPY back into a consolidation mode that has kept USD/JPY roughly between 101 and 104 since Feb. this year.
(usdjpy daily chart, 6/30)
It should be noted that last week Friday’s bearish candle closed below the 200-day SMA, the first time since Nov. 2012. Don’t be surprised if the market needs to test it a few times before another leg down below that 2014-low, which would first expose the psychological level of 100.
To contact the reporter of this story, email Fan Yang at email@example.com
Previous: Forex Weekly Forecast (6/30-7/4)