On the daily USDJPY chart below, we can see that the pair recently pulled back to the red long period moving average and the 50% Fibonacci retracement level. The correction started because we got some hot US economic data like the S&P Global US PMIs that sent Treasury yields and USD/JPY higher.
Recently, though we got some bad economic reports starting with the ISM Manufacturing PMI on Monday and then the US Job Openings yesterday. Both have missed expectations by a notable margin and the market switched again to price the recession with lower Treasury yields and lower USD/JPY.
On the 4 hour chart below, we can see that the price bounced on the trendline yesterday before breaking below it as US Job Openings missed expectations. The moving averages have crossed again to the downside and that will give the sellers more conviction.
Today we have the US ISM Services PMI, which is a very important report as the services sector is the one that remained resilient despite aggressive tightening and recession fears. A beat would send the pair higher while a miss would send it lower. The next target for the sellers is the low at 129.60.
On the 1 hour chart below, we can more closely the short-term price action. We can see that the price bounced on the 132.20 support and retested the broken trendline before falling and then selling off as US data missed expectations.
Today we may see a pullback to the broken support now turned resistance where we have also the 50% Fibonacci retracement level. It’s more likely that we’ll see such a retracement only if the data beats expectations, as a miss would send the pair lower immediately.
