Daily Forex Reports | by Kate Curtis | Wednesday, 30 March 2016 03:28 UTC
USDJPY has formed lower highs and found support at 111.25, creating a descending triangle pattern on its 4-hour time frame. Price is currently testing the resistance at 113.50 and if this keeps gains in check, the pair could make another test of support.
RSI is on the move lower, confirming that bearish momentum is in play. Stochastic is already in the oversold level so buyers might regain energy and push price back up later on. Meanwhile, the 100 SMA is below the 200 SMA so the path of least resistance is still to the downside.
A break below the triangle support could lead to a selloff of around 400 pips, which is roughly the same height as the chart formation. A move below the 111.00 handle could confirm a downside breakout while a rally past 114.00 could be enough to show an upside break.
Fed Chairperson Janet Yellen reiterated her dovish bias in her latest testimony, citing that caution is warranted for additional tightening measures. She also explained that global economic and financial risks have increased, although employment and domestic spending remain strong.
The CB consumer confidence index rose from 94.0 to 96.2, outpacing the consensus at 93.9 and indicating a pickup in consumer optimism. The US ADP non-farm employment change report is due next and it might show a 195K gain in hiring for the month.
As for Japan, its preliminary industrial production report for March showed a 6.2% decline versus the projected 5.8% fall. Earlier in the week, its household spending report beat expectations while the retail sales reading came up short.
By Kate Curtis from Trader's Way
Forex Market Analysis
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