Japanese yen launched Asian trading sessions with a sharp strong tone facing pale greenback supported by positive summary by BOJ and Services Producer Price Index SPPI 0.8% compared to 0.5% on previous sessions. The pair penetrated the taboo support level (110.60) aggressively with 110.25 22-Nov-2016-fresh lows, from which bull forces rallied at 103.71 7-Nov-2016 low. Overall, USD/JPY has shed -79-pips as price action, trading below 200 SMA (111.17 D1), and it is expected to drift downward further more given the current circumstances.
BOJ Summary was as follows:
1- Japan's economy has continued its moderate recovery trend and private consumption has been resilient against the background of steady improvement in employment.
2- Exports and production have remained firm on the back of a global pick-up in manufacturing, mainly supported by IT-related goods.
3- Japan's economy is likely to continue to recover in line with the path we expect, backed by synergy effects of the government's large-scale stimulus package and the Bank's monetary easing measures, with improvements in overseas economies.
4- Japan's economy is projected to continue to see moderate recovery toward fiscal 2018, unless downside risks stemming from developments in overseas economies materialize, such as a rise of protectionism, political and economic instability in Europe, and an increase in geopolitical risks in the Middle East and Asia.
On the other hand, US dollar was bearish for the second consecutive week with a clear signal for additional bearish forces as the Index gaped downward -$0.42 and dug deeper at 99.06, 2017-new-lows. Trump's healthcare vote with an annulment on Friday showed weak Republicans trying to replace ex-Democratic Obamacare health program, which added additional question marks to Trump's capacity to lead the free world, and consequences are expected to dilate further more as Wall Street opens.
Fundamentals:
1- USD - FOMC Member Evans speech today at 6:15 PM GMT.
2- USD - CB Consumer Confidence tomorrow at 3:00 PM GMT.
3- USD FOMC Member Kaplan speech tomorrow at 6:00 PM GMT.
Technical:
Trend: Bearish
Resistance levels: R1 111.33, R2 112.38, R3 113.33
Support levels: S1 110.25, S2 109.33, S3 108.20
Trend: Bearish Sideways
Remark: Current situation of low U.S Index and positive Japanese data signals for further dips for USD/JPY. Negative decision on Trump's healthcare program will still tail for the coming trading hours and market should expect further declines for US dollar. Also, FOMC members appearances this week are heavy, traders should watch for hawkish hints regarding coming U.S Fed hikes with efforts to rescue U.S Index.
A penetration for S1 will increase further selloffs and wash towards S2 level. A close below S2 level projects additional bear forces for the cable but be careful from setback as a test on support levels. Keep in mind that below S3 level is a threat for USD/JPY Nov-2016 rallies. A close above R2 level is an alert for trend reversal and above R3, bullish trend will re-confirmed once again.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.