This morning has been an active one for the USD, with several key economic metrics being released. U.S. CPI came in at 2.0% meeting expectations, and Retail Sales (Oct.) measured 0.2%, outperforming projections. The result has been lagging performance by the USD for the session, but a trend that appears to be losing steam.

In the event that the USD shows some resilience, we may have a nice short entry facing the USD/JPY.

USD/JPY Technicals

Tuesday’s late session reversal has driven the USD/JPY beneath key support levels, prompting reevaluation.

USD/JPY, Daily Chart

The news cycle of the last 18 hours has stimulated the markets. For the USD/JPY, intraday timeframes are posting retracements off of daily lows. If this continues, several key resistance levels will be in play:

• Resistance(1): Bollinger MP, 113.30

• Resistance(2): 20 Day EMA, 113.40

• Resistance(3): Daily SMA, 113.52

Bottom Line: With such a bearish formation on the daily chart, I am inclined to short areas of resistance. A sell from 113.24 with an initial stop above 113.52 is a solid way to capitalize on the price action. The trade management is flexible, allowing for a 1:1 or 1:2 R/R payoff of 28 or 56 pips.

If this trade is elected during the U.S. session, check back for tips on how to actively manage the open position.