USDJPY lost ground overall last week after the American economy continued to surprise on the downside, but the Japanese one is not doing better either. The greatest disappointment came from the current account indicator, which was published way below expectations (-0.2 T), being the widest current account deficit on record for the Nippon economy. Retail sales and the industrial production fell short of the expectations with a decrease of -0.4%, respectively -0.3% while the University of Michigan Consumer Sentiment saved the week with a better than expected reading for the United State economy.
It has been a week when Janet Yellen testified in front of Congress and managed to help the stock markets and depreciate the dollar by her comments. Another interesting fact was the correlation between the capital markets and gold, which moved upwards for the last days. The yen won the battle with the American dollar because of its safe haven status and the weakness that the American economy is showing it right now.
Preliminary GDP (6:50 GTM)-Monday. The first release of GDP and thus tends to have more impact, so do not miss this publication as the last quarter was a 0.3% increase and this time it is expected 0.7%, so it will be interesting to see how the GDP will turn out.
Empire State Manufacturing Index (8:30 GTM)-Tuesday. It is a leading indicator of economic health and give the investors an idea about how the manufacture industry is going in the United States. A reading above 0 means improving conditions. The expected value is 9.9, while last month was 12.5
BoJ Monthly Report and FOMC Minutes-Wednesday. The latest insights into the economic and financial conditions. A more hawkish than expected tone is good for currency.
Core CPI m/m (8:30 GTM)-Thursday. Is the change in the price of goods and services purchase by consumers and it is important because is correlated with inflation, an aspect of the economy the Federal Reserve keeps an eye on.
Existing Home Sales (10:00 GMT)-Friday. It has more impact than home sales indicator and it is a leading indicator of the economic health. For the last four months has been published below expectations.
Support: 102.00, 103.30
Resistance: 101.00, 100.00
The Japanese yen scored another week in which advanced on the US dollar weakness and after last Thursday even broke the 38.2 Fibonacci level, Friday managed to close below this level, aspect which looks pretty bearish to me. For the moment USDJPY is at 101.77 and this week could be a moment of consolidation between 38.2 and 50.0 level, with a high probability to go under 101 by the end of the next week.
Support: 101.00, 101.55
Resistance: 102.65, 103.30
The bearish outlook we have seen on the daily charts is shared by the hourly one if we take into consideration the symmetrical triangle that is forming. This kind of pattern is a continuation one and indicates that the principal movement, in our case downwards, is going to continue. A close on a H1 timeframe below the 101.55 support could trigger a descending trajectory towards the daily support at 101.00.
Bullish or Bearish
Overall, both the intraday and daily signals seem to point towards a bearish week for USDJPY and I expect the US dollar to keep losing ground. On the other hand, I am still maintain a cautious approach for the intraday trading decisions as some American macro indicator could surprise us on the upside and to see a rally for the USDJPY.