USD/JPY ends the bearish correction
|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.
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