USD/JPY broke below the important support area 112.50 on Friday. Currently USD is seen to gain some strength over JPY. It would be interesting to see the impact the Core Durable Goods Order will have on the market today. The figure is forecasted to be unchanged at 0.5% and Pending Home Sales report which is expected to decrease from 1.6% to 1.1%. It is expected that this pair would be very volatile during the release of the USD events today. As of some speculation it is also found that there is no certainty in interest rate increase which might result in the weakness of USD in the future. On the other hand, tomorrow morning JPY has Prelim Industrial Production report which is expected to have a downfall from 0.7% to 0.4%, Retail Sales to increase from 0.7% to 0.1%, and Housing Starts is also expected to be decreased from 3.9% to 3.4%. This pair is expected to be very volatile and provide hints for upcoming moves after the economic events takes place.
Now let us look at the technical view, after breaking below the support 112.50, it has turned into resistance now. Recent resistance area lies at 112.50-113.30. It is expected that the price will retrace back towards 112.50 resistance level and from there if we see any bullish rejection or bearish pressure we will be looking forward to sell with a target towards recent support at 111.60 and later at 110.50-60. We will not change our bearish bias to bullish unless 113.30 is taken out with a daily close on the upside.
