USDJPY has been trending lower recently, moving below a descending trend line connecting the latest highs of price action on the 1-hour chart. Price is currently testing this trend line and might be due for another drop.
The 100 SMA is below the 200 SMA, confirming that the path of least resistance is to the downside and that the selloff is likely to carry on. This moving average is also near the trend line, adding to its strength as a resistance area.
Meanwhile stochastic is heading higher but is nearing the overbought region, indicating weaker buying pressure and a possible return in bearish momentum. RSI is also close to the overbought levels.
The US recently released a bunch of downbeat economic reports, starting from its flash services PMI which indicated industry contraction. New home sales also came in weaker than expected.
For today, the durable goods orders data is due, along with the initial jobless claims report. Another round of weak data could mean more losses for the US dollar. Analysts are expecting to see a 3.0% rebound in headline durable goods orders and a 0.2% uptick in core durable goods orders.
As for the yen, Japan’s Tokyo core CPI and national core CPI figures are up for release next. Weak readings could revive talks of additional BOJ easing, which might also weigh on the yen. Analysts are expecting to see a flat reading for the Tokyo core CPI and a 0.2% decline for the national core CPI.
By Kate Curtis from Trader’s Way