After many sell-offs, which I often pointed out could happen at any time, when the US Dollar against the Japanese Yen USD/JPY pair tested sharp consecutive gains reaching the resistance level of 151.90, the highest in more than a year, it was natural for profit-taking sell-offs to occur, moving the currency pair towards the support level of 147.15 with bearish momentum from the decline in US inflation rates.
The USD/JPY pair then rebounded upwards again, gaining up to the resistance level of 149.74, the closest point to the psychological resistance of 150.00, which often supports the strong control of the bulls over the currency pair. The pair closed last week's trading stable around the level of 149.40, ahead of an important trading week for the US dollar, as it awaits the announcement of a package of economic data led by the announcement of the US Federal Reserve's preferred inflation reading, the announcement of the US economic growth rate, and statements from many officials of the US central bank's policy.
According to fundamental analysis, the USD/JPY currency pair is being traded affected by the results of the latest economic data. Japan's Leading Economic Index for September exceeded the expected reading of 108.7 with a reading of 108.9. On the other hand, the Jibun Bank's initial Manufacturing Purchasing Managers' Index for November defied expectations at 48.8 with a reading of 48.1. Last Thursday, Japan's National Consumer Price Index for fresh food exceeded the expected annual change of 3% with a change of 2.9%.
In the United States, Durable Goods Orders for October defied the expected change of -3.1% with a change of -5.4%. Also, Durable Goods Orders excluding transportation fell by 0.1% with a change of 0%, while Non-Defense Capital Goods Orders excluding aircraft were lower than expected at 0.1% with a change of -0.1%. US initial unemployment claims for the week ending November 17 exceeded estimates of 225 thousand claims with a total of 209 thousand. The US Michigan Consumer Sentiment Index for November also exceeded expectations of 60.5 with a reading of 61.3.
Technical Analysis of the Dollar/Yen Pair:
The US Dollar against the Japanese Yen USD/JPY has now risen to be traded a few levels above the 100-hour moving average line. As a result, it seems that the USD/JPY pair is moving near overbought levels of the 14-hour Relative Strength Index. In the short term and according to the performance on the hourly chart, it appears that the USD/JPY pair is being traded within an ascending triangle formation. The Relative Strength Index also seems to be moving near overbought levels, indicating an upward bias. Therefore, bullish speculators - the bulls - will look to extend the current rise towards 150.09 or higher to the resistance at 150.62. On the other hand, bearish speculators - the bears - will look to pounce on declines around 149.10 or lower at the support at 148.67.
In the long term and according to the performance on the daily chart, it appears that the US Dollar against the Japanese Yen USD/JPY is being traded within a descending channel. This indicates a significant long-term bearish bias in market sentiment. Therefore, bearish speculators - the bears - will target extended declines around 147.91 or lower at the support at 145.96. On the other hand, bullish speculators - the bulls - will look to pounce on rebounds around 151.47 or higher at the resistance at 153.43.
