FX.co ★ USD/JPY new down channel

The USD/JPY pair was trading in the red at the 115.04 level at the time of writing. In the short term, it challenges the 115.00 psychological level. DXY's drop and the Japanese Yen Futures rally forced the rate to drop.

Fundamentally, the Japanese and the US data came in mixed today. The Japanese Trade Balance was reported at -0.93T below -0.40T expected, while the Core Machinery Orders surged by 3.6% compared to the 2.0% drop expected.

Unfortunately for the USD, the US Unemployment Claims indicator increased unexpectedly from 225K to 248K whereas traders expected a potential drop to 217K. Housing Starts and the Philly Fed Manufacturing Index came in worse than expected as well.

USD/JPY challenges 115.00 psychological level

USD/JPY ignored the uptrend line and now it challenges the 115.00 psychological level. After escaping from the up-channel pattern, the rate is somehow expected to drop. Stabilizing below the 115.01 static support could signal that the sellers will take full control.

The price action developed a down-channel pattern, so as long as it stays below the downtrend line, the bias remains bearish.

USD/JPY outlook

In the short term, we cannot exclude a potential rebound, USD/JPY could come back to test and retest the broken uptrend line. A minor rebound or a sideways movement could bring new selling opportunities. The channel's downside line stands as a potential target.