USD/JPY Surge Dominates Market Sentiment
USDJPY Major Market Correction | Daily Rising Trend Line Support
There appears to be no end to USDJPY’s losses for now, as price has gapped down and is showing increased downward momentum. Stochastic is moving down, although it already reached the oversold zone.
Until the oscillator starts crossing above the oversold region, price could keep heading south and completing a major market correction. Using the Fibonacci tool on the latest swing low and high from 101.00 to 110.00 indicates that the 50% retracement level lines up with the 105.50 minor psychological support while the 61.8% Fibonacci level coincides with 104.50.
In addition, an uptrend line can be drawn to connect the latest lows on the daily time frame, with the rising support level lining up with the 50% to 61.8% Fib retracement zones. These could be the next floor for price action before USDJPY sees a bounce.
For now, price is stalling near the 38.2% retracement level around the 106.00-107.00 levels, which might also hold as support. Fundamentally, the dollar is still stronger than the yen but it looks like the recent shift in Fed stance is taking its toll on the US currency.
GBPUSD Short-term Consolidation | Potential Breakout Scenario
GBPUSD is moving in tight consolidation for the past few days, as traders await top-tier data releases from the UK. CPI and jobs readings are up for release, both of which might push the pair in a clearer direction as these would confirm whether or not the BOE can start tightening by next year.
The pair is moving inside a symmetrical triangle pattern, as seen on the 1-hour and 15-minute time frames. The chart pattern is approximately 300 pips in height, which suggests that the resulting breakout could be of the same size.
The resistance of the triangle is around the 1.6100 major psychological level while support is at the 1.6050 minor psychological mark. An upside break past 1.6100 could push GBPUSD up by as much as 300 pips and a downside break below 1.6050 could lead to a 300-pip drop.
UK CPI is likely to dip again, which might undermine the possibility of BOE tightening and lead to pound weakness. However, the jobs release is expected to post another strong gain in hiring and an improvement in the unemployment rate, which might keep the pound afloat. Other event risks for this trade include the US retail sales release, with weak figures likely to push the dollar lower against its trading counterparts.
GBPJPY Rising Channel Formation | Support around 170.00 Levels
GBPJPY is moving in an ascending trend channel on its daily chart, as price is making its way to test the bottom of the range. This lines up with the 170.00 major psychological support, which might keep any losses in check.
A bounce from this area could take GBPJPY back to the top of the channel near the 180.00 major psychological resistance and previous highs. Further gains could lead to an upside break, but it would take a considerable amount of buying pressure to result to a breakout.
On the other hand, a break below the channel support might mean more losses for the pair and a potential long-term reversal. The next support zone is located near the 168.00 major psychological level.
A weak support bounce might only take GBPJPY up to the mid-channel area of interest near the 178.00 mark, which has been marked by consolidation in the previous months. Event risks for this trade include the release of UK CPI and jobs data later on this week, with strong figures likely to lead to a pound rally until the end of the week.