USDJPY is trading slightly lower in today’s Asian session despite a dovish BOJ meeting minutes and disappointing Japan CPI report. As of this writing, the currency pair is down by 0.11% at 106.86.
According to minutes of the most recent BOJ rate decision, policymakers are feeling heightened sense of uncertainty for the Japanese economy amid the coronavirus pandemic. Meanwhile, the National core CPI report for May contracted by 0.2% compared to a year ago. The consensus was for a more modest downtick of 0.1% for the month.
Despite these, USDJPY is still trading lower. A possible explanation could be profit-taking ahead of the weekend.
However, technicals suggest that the currency pair could soon trade higher. For one, the 4-hour time frame shows that USDJPY is testing support at the rising trendline (from connecting the lows of May 6 and June 11).
A closer look at the 1-hour time frame also shows what looks like a double bottom chart pattern. Characterized by a market getting rejected at a support level twice, USDJPY found support at 106.70. A strong bullish close above the neckline support at 107.12 could mean that there may be enough buyers in the market to push the currency pair to near-term resistance at 107.63 where it peaked on June 16.
On the other hand, a close below yesterday’s low at 106.66 would invalidate both the double bottom and the rising trendline. It could mean that there are still sellers in the market. With this, we could soon see USDJPY fall to near-term support at 105.97 where it bottomed on May 6.More content