The US Dollar (USD) fell broadly against the Japanese Yen (JPY) yesterday, dragging the USD/JPY to less than 101.80 following a surprise increase in the Japan’s growth during the first quarter. The sentiment remains bullish due to Higher Low (HL) in the recent wave. A breakout through the daily triangle will provide clear direction to the pair.
As of this writing, the pair is being traded near 101.87. A support can be noted around 101.59 which is the lower trendline as demonstrated in the following chart. A break and daily closing below the trendline support will push the pair into negative territory, turning the overall sentiment to bearish.
On the upside, the pair is likely to face a hurdle around 102.00 that is the psychological number and 38.2% fib level ahead of 102.35, the 55 Simple Moving Average (SMA) and then the trendline resistance which is currently sitting in near 101.51. A break and daily closing above the trendline resistance will validate a rally towards the 104.12 resistance area.
Japan GDP Report
Japan grew at 5.9% during the first four months of the ongoing year as compared to just 0.3% growth in the same duration of the year before, a government report revealed yesterday up beating the median projection of 4.2% growth rate. The report showed huge jump in the growth of the Asian nation, signaling that the economic policies of the Prime Minister Shinzo Abe, dubbed as Abenomics, are yielding favorable outcomes.
The Japanese growth figure has confirmed the view of investors that the Bank of Japan (BoJ) will stick to the current pace of the asset purchase program, halting further fall of the Japanese Yen against the greenback. Buying or selling USD/JPY on breakout could be the safest strategy in this scenario.