USDJPY to build further downside momentum in the medium term (extract from Weekly Market Forecast 6th of April 2014)

USDJPY tested the key 104.00 level again during the last week, but failed to hold gains above the mentioned level. The market sentiment looks bearish in the short to medium term for the pair. I think there are chances that the pair might duplicate the previous down-move, as highlighted in the chart shown below. So, selling rallies should be preferred during the next week.

There is a possibility of bearish trend line developing on the 4 hour chart. I think until the pair is trading below 104.11 level one might consider entering into a sell trade on major rallies. If the pair bounces from the current levels to around the resistance zone of 103.80 level and forms a bearish divergence, then we can jump into a sell trade. This possibility can be seen in the chart shown below.

Initial target should be around the 102.40, and final target could be around the 101.00 level. Stop should be placed above the 104.20 level.

Major events scheduled in the upcoming week
On last Thursday, the ECB announced the interest rates. They kept the interest rates as it is at 0.25%, and decided not to reduce in yesterday’s meeting. However, the Euro currency was seen trading lower, as the ECB President sounded more dovish than expected. He also said that the possibility of QE in coming months cannot be ruled out if the inflation dives more than expected. This resulted in a down-move in EURUSD pair. The pair fell close to the 1.3700 level, and struggling to recover ground. Other majors are also trading lower, including the GBPUSD pair. On Friday, US Nonfarm payrolls and unemployment data were published in the NY session. The outcome was mostly in line with the expectations, and the US dollar was seen consolidating after the release.

Let us look at all major events lined up in the upcoming week.
Sunday – Australia’s AIG construction index.

Monday – German and Spanish industrial production, Swiss CPI, Japan’s adjusted current account, New Zealand’s NZIER business confidence and Australia’s NAB business confidence.

Tuesday – Swiss unemployment rate, BOJ press conference, UK manufacturing production, Canada’s housing starts, UK NIESR GDP estimate and Australia’s home loans data.

Wednesday – German trade balance, UK trade balance, FOMC meeting minutes, New Zealand business PMI, Australia’s employment data and Chinese trade data.

Thursday – BOE interest rate decision, US initial jobless claims and import price index, Chinese CPI and PPI data.

Friday – German CPI data, US PPI data and Michigan consumer sentiment.

This analysis is taken from Weekly Market Forecast, which also includes trade opportunities on: EURJPY, USDCAD, EURCAD, AUDUSD, NZDUSD, AUDNZD, EURAUD, USDCHF, GOLD and INDICES.
Get it HERE: Vladimir’s Markets Forecast

Happy trading friends!

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