USDJPY to build further downside momentum below 107.00

The US dollar recently blasted higher against the Japanese yen to trade above the 107.00 level. Currently, it looks like the pair is consolidating in a range, and might correct lower in the short term. So, I think we should be looking for a small risk/reward sell trade setup in the upcoming session as long as the USDJPY pair is trading below the 107.20-25 levels.

There is a bearish trend line formed on the hourly chart of the USDJPY pair as can be seen above. The hourly RSI is also below the 50 level, which suggests that the pair might continue trading lower in the short term. So, we can enter into a sell trade around the 107.05-10 levels. Remember, we would stay away from the pair if it jumps higher during the coming session around the US PPI release.

Initial target should be around the 106.40 level, and final target could be around the 106.20-10 levels. Stop should be placed above the 107.25 level.

Reviewing yesterday’s events and trades
Yesterday, the US dollar mostly consolidated in a range against the Euro, the British pound and the Japanese yen. The AUDUSD pair opened the week with a gap lower, but later managed to close the gap. The US industrial production data was released yesterday during the NY session. The outcome was discouraging as the US industrial production fell by 0.1% in August. However, the NY empire state manufacturing index registered a massive gain with a reading of 27.54, up from the previous reading of 14.69.

Fundamental Outlook for the day
Today, the US Producer Price Index (PPI) and Treasury International Capital (TIC) Net Long-Term Transactions data will be released during the NY session. The US PPI is not expected to register an increase this time. So, it would be interesting to see how the US dollar reacts after the end result is announced. Moreover, the Bank of Canada Governor will be speaking later today. This particular event might cause swing moves in the Canadian dollar in the short term.

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 carefully friends. Happy trading!

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