Bottom line:  USDJPY bearish structure remains intact until prices trade below 112.22 levels. Bears remain poised to push lower towards 94.00 levels and a break below 101.50 would accelerate the drop.

Fundamental Outlook:

Oil prices continue to slide lower as WTI Crude dropped below $19.25 though marginally. Despite the production cut agreed by the OPEC members and a truce between Russia and Saudi Arabia, the slide continues.

With a decline in new cases and deaths caused due to COVID-19 pandemic, most countries plan to open their economies. France and Italy decides to prolong their lockdowns until early May 2020.

Today’s events:

Bank of England Liabilities/Credits Survey @ 04:30 AM EST

Initial US Jobless Claims @ 08:30 AM EST

Technical Analysis:

USDJPY remains in control of bears as it hits 107.00 mark yesterday; but probabilities still remain for a push towards 110.00 before reversing sharply. Either way, we can expect a continued drop either from 108.50/60 or 110.00 levels, going further.

USDJPY has been correcting lower since 125.80 highs and is expected to complete its drop around the 94.00 mark. After having produced a multi-year bearish triangle, the USDJPY finally terminated around 112.40 mark. This is defined as a strong resistance going forward.

The drop between 112.40 and 101.18 broke below the triangle support. Furthermore, the subsequent rally stalled at 112.22, just above the fibonacci 0.786 retracement of the previous drop. Lower degree waves suggest a lower top could be in place at 109.50 levels and USDJPY is expected to slide lower.

A break below 101.18 would be required to break out of the price range and accelerate lower towards 94.00 levels. Any intraday pullback should face resistance around the 108.50 mark.

Most traders might be willing to hold short positions taken earlier and add further around 108.50. Protective stops might be placed at 112.22 and projected targets below 101.50.

Prepared by

Harsh Japee, Technical Analyst.

USDJPY Chart

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