The US dollar traded lower against the Japanese yen, and broke an important support area. It is correcting higher as of writing. However, I think the USDJPY pair has more room towards the downside. There is a convergence on the 4 hour chart as well. So, there is a chance of a spike higher, which can be considered as a selling opportunity.
There was a bullish trend line on the one hour chart of the USDJPY pair, which was breached recently. This broken trend line might turn into resistance moving ahead. There are several resistances on the way up around the 109.05-25 levels. If the pair corrects higher, trades closer to the highlighted resistance area and forms a bearish divergence, then we can enter into a sell trade. Remember, wait for the right levels to jump into a trade to avoid a losing trade.
Initial target should be around the 108.20 level, and final target could be around the 107.80 levels. Stop should be placed above the last high.
Reviewing recent events and trades
Yet again, the New Zealand dollar and the Australian dollar turned out to be the best performers during the Asian session. Both pairs spiked higher and challenged an important resistance area. There were some releases during the Asian session as well, which lifted the pairs. Yesterday, the US ISM manufacturing data was published during the NY session, which came as a disappointment. It registered a decline from 59.0 to 56.6. The US dollar was seen trading lower after the release. The Euro also managed to gain some ground, especially against the Swiss franc.
Fundamental Outlook for the day
Today, we have an important risk event lined up i.e. the ECB interest rate decision and the most critical one is the ECB press conference. We can expect a lot of swing moves in the Euro against the US dollar. It is currently trading around critical levels, and can make it or break it. Moreover, the US initial jobless claims data will be published, which is expected to climb from 293K to 297K. Let’s see how the US dollar plays out in the short term. It might correct lower if things don’t fall into one place.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, GBPCHF, AUDCAD, USDCAD, USDJPY, CADJPY, AUDJPY and NZDUSD.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
