USD/JPY

USD/JPY Breaks Above Daily Resistance

Posted Tuesday, June 12, 2018 by
Shain Vernier

Investors are treading lightly in the forex today. In the wake of the historic U.S./North Korea summit and ahead of Wednesday’s FED meeting, the action on the markets has been slow. However, the USD/JPY is showing signs of life. The release of several U.S. economic metrics has boosted sentiment toward the Greenback — we will see if the optimism lasts.

Economic Metrics

In the U.S. pre-market hours, there were several pieces of economic data released to the public. Here is a quick look at the hard numbers:

Event                                                                Actual               Projections

NFIB Business Optimism Index (May)             107.8                   105.2

CPI(YoY, May)                                                       2.8%                    2.7%

CPI, Core (May)                                                    256.889             256.897

CPI Ex Food and Energy (YoY, May)                 2.2%                    2.2%

All in all, the CPI data came in right on schedule. The numbers allude to growing inflation in the United States. This is a welcomed sight to the FED, whom have publicly stated inflation is currently above their 2.0% benchmark. Today’s CPI data supports the coming FED rate hikes and policy of quantitative tightening for the intermediate-term.

USD/JPY Technicals

With North Korean hostilities taking a backseat to a more peaceful dialogue, the Japanese yen has slipped against the USD. Even though recent developments out of the U.S./North Korea summit are positive for Japan in the long-term, traders are taking a skeptical view of the yen in the short run.

USD/JPY, Daily Chart
USD/JPY, Daily Chart

Here are the levels to watch for the remainder of the session:

  • Resistance(1): 78% Fibonacci Retracement, 110.67
  • Support(1): Daily SMA, 109.89
  • Support(2): Bollinger MP, 109.79

Bottom Line: After an early session bullish breakout, the USD/JPY has given back some of its gains. If we see a further retracement, a long scalping plan from 109.92 is a good way to rack a few pips before the daily close. Using a modest profit target of 8-12 pips and 1:1 risk vs reward management plan, this is an inexpensive way to trade the action ahead of the coming FED announcements.

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About the author

Shain Vernier is our US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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