USDJPY Weekly Forex Forecast – 6th to 10th August 2018
Fundamentals Outlook: The economic calendar for the week ahead takes a quiet turn. No major releases of importance are lined up this week. From the U.S. the producer prices index data is due to come out on Thursday followed by the consumer price index data on Friday. Given the recent slowdown in the core PCE data for the second quarter, investors will be looking for any further clues of potential weakness in the consumer price reports. Elsewhere, data from the Eurozone is limited to the German industrial production and trade balance figures. The eurozone Sentix investor report and factory orders from Germany will be due earlier in the week. A quiet week from Japan will see only the Bank of Japan releasing its summary of opinions.
Chart set up: The USDJPY currency pair was seen breaking out to the upside from the descending wedge pattern that formed outside the rising price channel. The gains saw the U.S. dollar testing the previous resistance level above 111.55 before giving up the gains as the currency pair closed back below 111.55 level.
Key support/resistance levels: Support: 110.75; Resistance: 111.55
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Commentary: The USDJPY currency pair is expected to post a modest retracement back to 111.55. Establishing resistance level could trigger a short term reversal keeping the currency pair in check. The sideways range around 111.55 and 110.75 is likely to be maintained in the week ahead.
There is a risk of a downside breakout near 110.75 with the descending triangle pattern likely evolving. This is noticed with the lower highs being formed following the bounce off the support at 110.75. A break down below 110.75 could signal a downside move toward the next lower target at 109.50. For the week ahead, the USDJPY currency pair is expected to be bearish.
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