USDJPY Ends the Bearish Correction
17 August 2022
A weaker JPY and stronger USD somehow forces us to look at the situation on the
USDJPY, which in these conditions should be one of the rising pairs on the markets
and frankly speaking, it is.
Actually, yesterday and today, the USDJPY created a major, long-term buy signal.
This optimism is coming from the fact that the price bounced off a crucial horizontal
support at 131.5 (yellow). That area was a top in April and May and already served
as a support in June and July. The price staying above that level was a key to hold
the positive sentiment alive and buyers passed this test.
Another thing is the breakout of the mid-term down trendline (red), which means
the end of the bearish correction that started from mid-July. Both those things are
very bullish, so a current rise should not be a big surprise.
Not so long ago, we got to know the retail sales data from the US. Core Retail Sales
were better than expectation but the headline Retail Sales was slightly worse than
anticipation. In both cases, we also got a negative revision of the data from last
month. The initial reaction was a slightly stronger USD but let’s say that the data
failed to significantly increase volatility. Now, half an hour after the data, the
USDJPY is slightly lower than before the data release.
To wrap things up: sentiment on the USDJPY is positive and can stay this way as
long as the price remains above 131.5. In a few hours, we will get the minutes from
the last Federal Open Market Committee (FOMC) meeting and that can of course
influence the USDJPY stay sharp.