USD/JPY has increased a little in the last hours but the rebound could be only a temporary one. The pair has dropped in the seller's territory again, so a potential deeper drop should not be ruled out.
Fundamentally, the BOJ Core CPI has increased by 0.2% versus 0.1% expected and compared to the 0.1% growth registered in the previous reporting period. This news provided support to the Japanese Yen in the first part of the day.
The US Dollar has managed to increase versus the Yen and now it tries to stay higher after the US New Home Sales has increased from 701K to 708K though specialists expected to see a drop to 698K. Tomorrow, the Durable Goods Orders and the Core Durable Goods Orders reports are likely to bring more activity to this pair.
USD/JPY retests broken levels
USD/JPY moves sideways on the H4 chart. Unfortunately, USD/JPY's failure to stay above the ascending pitchfork's median line (ML) signaled that the upside is limited. Now, it has failed to stabilize above the lower median line (LML).
If the price validates its breakout through this line, which is the dynamic support, it will indicate a new bearish momentum. A false breakout above the immediate upside obstacles or a bearish engulfing could signal a potential drop.
Outlook
The selling pressure is high in the short term as long as the pair stays under the weekly pivot point (109.70). Maybe USD/JPY has increased only to retest this level before dropping deeper. Still, only a new lower low, that is the bearish closure below 109.41, could really signal a broader downside movement.
The material has been provided by InstaForex Company - www.instaforex.com