FX Play of the Day: USD/JPY Downtrend to Pick up on U.S. PPI Release?

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This pair has been cruising lower for the most part of the week!

Will the upcoming U.S. PPI release allow the downtrend to gain traction?

Right now, USD/JPY is stalling around the 138.00-138.50 zone, possibly considering a quick pullback before resuming the slide.

USD/JPY 15-min Forex Chart

USD/JPY 15-min Forex Chart by TV

Check out this steady downtrend on USD/JPY!

The pair looks ready for a test of its descending trend line that’s been holding for the past few days. Did I mention that the resistance zone lines up with the 50% Fib, too?

A larger pullback could still reach the 61.8% level that coincides with the pivot point (139.02) near a major psychological mark.

If any of these hold as resistance, price could resume the drop to the swing low at 138.07 or create new ones closer to S1 (137.63).

Technical indicators are pointing to a continuation of the slide, as the 100 SMA is below the 200 SMA to reflect bearish vibes while Stochastic is starting its descent from the overbought region.

The oscillator has plenty of room to head south before reflecting exhaustion among sellers, so the downtrend could keep going until oversold conditions are met.

Of course the dollar could take cues from the upcoming U.S. PPI report, as more signs of subdued inflationary pressures could further dampen hopes of a July FOMC rate hike.

Recall that the U.S. CPI figures already came in short of estimates, with the year-over-year figure tumbling from 4.0% to 3.0% – its lowest level since March 2021 and not too far away from the Fed’s inflation target.

Meanwhile, intervention jitters for the Japanese yen are keeping the currency supported for the time being.

Do you think USD/JPY can head much lower from here?

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.


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About the Author: Webbey Team

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