Data from Japan this week is mostly quiet for the major part of the week. On Friday, the national core CPI data and the all industries activity report is expected to come out. However, the Japanese yen is likely to be influenced by the market sentiment. This comes in the backdrop of rising trade tensions and the possibility of escalated trade wars. With the Japanese yen being a safe haven currency, investors will be looking to hedge their risks.
Chart set up: The USDJPY currency pair posted strong gains. The momentum in the rally is evident from the fact that USDJPY broke out sharply from the rising price channel. The near parabolic gains were however met with resistance neat 112.73
Key support/resistance levels:
Support: 110.95; Resistance: 112.73
Commentary:
The gains in the currency pair remain strongly overbought. This indicates a risk of price action recovering to the downside. The support level at 110.95 remains most likely to be tested in the near term. However, the initial retest of the rising price channel could serve as dynamic support. Despite this, we expect the USDJPY currency pair to post a correction in the coming week. For the week ahead, the USDJPY currency pair is expected to be bearish.
USDJPY Weekly Forex Forecast – 16th to 20th July 2018
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