USDJPY rebound taking shape

Countertrend reversal in play: Chart

U Turn 1

The US Dollar was under pressure against most of its major pairs on Wednesday with the exception of the JPY and NZD. On the US economic data front, the Mortgage Bankers Association's Mortgage Applications rose 4.6% for the week ending October 2nd, compared to -4.8% a week earlier. Finally, the Federal Open Market Committee's (FOMC) Meeting Minutes stated that on net, financial conditions have eased since the last Meeting. As equity prices have risen and the dollar continuing to depreciate, the Fed believes that aggressive monetary and fiscal policy are needed to keep the recovery going strong as market participants still see significant risks ahead.  

On Thursday, Initial Jobless Claims for the week ending October 3rd are expected to fall to 820K, from 837K in the week before. Finally, Continuing Claims for the week ending September 26th are anticipated to decline to 11,400K, from 11,767K in the prior week. 

The Euro was bullish against most of its major pairs with the exception of the AUD. In Europe, the German Federal Statistical Office has posted August industrial production at -0.2% (vs +1.5% on month expected).

The Australian dollar traded higher against all of its major pairs.

Looking at active pairs, the USD/JPY jumped 40 pips in Wednesday's trading making it one of the best performers against the majors. The pair remains inside a long term bearish trend channel however a reversal pattern has taken shape inside the channel. A bullish falling wedge reversal pattern has been confirmed. Look for a continuation of the rebound towards the 106.96 resistance area to see how the declining trend line acts as resistance. A break below 104.965 would call for a resumption of the main bearish trend channel. 



Source: GAIN Capital, TradingView

Happy Trading

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.