USD/JPY Breaks Above Daily Resistance

Posted Tuesday, June 12, 2018 by
Shain Vernier • 2 min read

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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