The US Dollar (USD) extended upside movement against the Japanese Yen (JPY) on Monday, increasing the price of USDJPY to more than 111.20 following the release of some key economic news. The technical bias remains bearish in the long run because of a Lower Low in the recent downside move on the daily chart.
As of this writing, the pair is being traded near 111.25. A support may be noted around 111.00, the confluence of psychological number as well as a major horizontal support ahead of 110.44, another major horizontal support.
On the upside, the pair is likely to face a hurdle near 111.88, the swing high of the last major upside rally ahead of 113.80, the high of 29th March 2016 and then 114.00, the psychological number. The technical bias will remain bearish as long as the 111.88 resistance area is intact.
Gross domestic product, a broad measure of goods and services produced across the U.S. economy, expanded at a 0.8% seasonally adjusted annual rate in the first three months of 2016, the Commerce Department said in updated figures on Friday. That was up from an initial estimate of 0.5% growth but still represented a deceleration from the fourth quarter’s 1.4% growth rate. That could prompt FED officials to support the second increase in short-term interest rates. In December, the U.S. central bank raised its benchmark federal-funds rate, which had been pinned near zero for seven years, to a range of 0.25% to 0.5%. Since then, policy makers have exercised caution in the face of worries about global growth and volatile financial markets.
Considering the overall technical and fundamental outlook, selling the pair near any of the above mentioned resistance levels could be a good strategy if we get a valid bearish reversal candle on the daily chart.