The US Dollar is still losing against major pairs. The US Dollar lost 0.68% against the Japanese Yen and is currently traded at 103.85 and nears important support levels.
Japan has been showing a steady recovery from the pandemic today’s Trade Balance and Exports data testifies. Battered US Dollar Index also supports the downtrend of the USD/JPY. Yesterday’s US Retail Sales, import and export price indexes data announced were below the forecasted, more importantly Core Retails sales (MoM) was 1 bp lower than the previous month’s 1.2%.
On a daily USD/JPY we can witness a downtrend channel that the pair follows. One of the important metrics on this chart is that the MA100 acted as a resistance on November 11, when USD/JPY hit the upper edge of the channel.
MACD is about to cross the signal line which will be a confirmation of the bearish continuation, which in other hands could be supported by the weak US Data to be announced this week. The market will be paying close attention to the two major US data announcements – Initial Jobless claims, expected to be 2K lesser than in the previous month and Philly Manufacturing Index which is expected to be lower by 10.3 bp than the previous month’s 32.3.
Important levels to watch are $103.70, which is a static and dynamic support on a 4H chart, closing below this level will be a ground for another round of sell-offs down to $103.166.
On both Daily and 4H charts, Moving averages act as resistances and MACD indicates bearish continuation. Investors also are cautious regarding the current Biden – Trump situation. Covid-19 vaccine effectiveness news helped the US Dollar Index gain some strength, though weakened again when it was announced by Biden that it’s actual application will take some time. If there are no tangible signs of economic recovery in the US and the spirit of “uncertainty” remains, the US Dollar against its counterpart Japanese Yen might as well plummet further to near year’s minimums – $101.747.