On Friday, the USD/JPY pair ended the week marginally weak near 108.20, confined throughout these last few days to a close range. Nonetheless, it placed a candlestick pattern called a lower low and a lower high for a third consecutive week, having pierced the 108.00 level for the first time since last January.
The safe-haven currency profited over the dollar’s strength and US Treasury yields fainting to their weakest since September 2017. Moreover, the Wall Street rose on speculation the US Federal Reserve may cut rates in the next few months, limiting Yen’s strength. As the week begins, Japan is set to release the final version of Q1 GDP, seen revised lower to 0.4% vs. the previous estimate of 0.5%. The country will also release its April Trade Balance, with a forecasted deficit of ¥664.3B.
Technically, the US dollar is correcting up versus the Japanese yen. USD/JPY managed to rise above the 50-period MA on H4 and get above the highs of last week.
Support and Resistance
Key Trading Level: 108.21
The pair is also trading over the weekly pivot point at 108.19. This opens the way up to the 109.00 area. This level is the target for the bullish correction. Beyond this point, it will be riskier to trace the retracement. Given the declining resistance line around 109.25, it will be sensible to think about selling the pair if it manages to get this far. All the best!