The markets were kept busy last week with a host of economic reports. The Federal Reserve held its monetary policy meeting where interest rates were left unchanged. The Fed signaled that it would remain patient when hiking interest rates. Data from the Eurozone showed that inflation continued to slow significantly during the month of January according to the flash estimates. Manufacturing activity in the Eurozone remained subdued.
The week ahead will see mostly second tier data that covers the German and French final services PMI followed by the Eurozone’s services PMI as well. Data from the U.S. is packed for the week ahead. Key data over the week includes the ISM’s non-manufacturing PMI as well as the advanced fourth quarter GDP report from the U.S. The U.S. economy is expected to slow in the fourth quarter of the year. Durable goods orders report and the delayed retail sales report will also be coming out on Wednesday. Data from Japan and Switzerland is relatively quiet for the week ahead.
Chart set up: The USDJPY currency pair was seen drifting lower but price action managed to post a recovery by Friday’s close. The USDJPY closed the week with some modest gains as prices recovered to the upside. The resistance level at 110.26 is likely to be tested in the near term.
Key support/resistance levels:
Support: 106.93; Resistance: 110.26
The USDJPY remains range bound with the resistance seen at 110.26 and the support at 106.93. Unless we see the USDJPY breaking out from the range, the currency pair could remain range bound within the said levels. In the near term, we expect the USDJPY to test the resistance at 110.26. A breakout above this level could trigger further gains but price will need to establish support at 110.26. The downside is looking limited for the moment with the support at 106.93 likely to hold the declines. The USDJPY could be seen turning bullish.
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