4 Hour Chart – USD/JPY 15/05/2020 10:50am

Essential Insights

  • USD/JPY is experiencing difficulties breaking and sustaining price above the 107 level.
  • US initial jobless claims declined from 3176k to 2981k, but still disappoint.
  • US Retail Sales are estimated to have dropped 10% in April.

Technical

USD/JPY is struggling to maintain prices above the 107 level. Upon retesting the 107 level, following the bullish break out from the descending wedge, prices surged to 107.400 however has given up those gains overnight.

Prices are currently rejecting from the 8-day and 20-day EMA cross, this may prove to be a difficult resistance to overcome. However, prices are still supported by the 107-weekly support.

If prices are able to break above the EMA cross, it is likely the previous high at 107.400 will be met, this is also in line with the 200-day EMA. If prices are not able to climb above 107.400, then 106 could be met swiftly after. It is evident that this currency pair is struggling to maintain real bullish momentum. Therefore, downside risks remain higher for the time being.

Fundamental

US Initial Jobless Claims figure for the week ending May 9, 2020 was released by the US Department of Labour. The market was looking for a decline in jobless claims from 3169K to 2500K however the actual figure was reported to be 2981k, thereby disappointing expectations.

It is also estimated that retail sales for the month, April will reveal around a 10% decline in US retail sales versus the previous recording at -8.7%. US industrial production for the month, April is also expected to fall by -11.5% compared to the previous reading at -5.4%.

Should the April data come close or beat forecasts, the Dollar Index may experience a fall, bolstering USD/JPY lower.