The Japanese Yen (USDJPY) barely reacted on the Japanese Government downgrading its economic outlook for the third time this year. The USDJPY price action is muted as the price consolidates above the September 19 high of $108.47. The next major resistance block awaits just 40 pips higher at the October 17 high of 108.97.
While the latest monthly assessment notes that the economy is recovering at a moderate pace, the prolonged weakness in exports and production continues to hamper the economy.
Yesterday, the USDJPY pair reached an ascending trend line, as seen in the chart below. The trend lines stopped the bulls in their tracks. The trendlines goes via the June and July lows, and the September high.
The expectations are that the trend line, which comes just below the 109.00 mark, will act as an intraday resistance. In case the trend line is broken, watch out for the triple confluence of resistance – the key 61.8% Fibonacci retracement, the fourth-month high of 109.00, and the 100 DMA – to act as a major resistance block.
On the downside, the 108.50 mark, consisting of the broken 50% Fibonacci retracement and the horizontal support (the previous resistance) to offer reliable support for the bulls.Download our latest quarterly market outlookfor our longer-term trade ideas.
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