The US Dollar (USD) extended upside movement against the Japanese Yen (JPY) on Monday, increasing the price of USDJPY to more than 123.00 following some key economic release on Friday. The technical bias remains bullish because of a Higher High in the ongoing wave.
The USD/JPY pair closed last Friday at 122.58, having retraced half of the gains achieved in the NFP Friday, on speculation the Bank of Japan may refrain from extending the monetary stimulus program, at least for the rest of the current fiscal year. Also, soft US macroeconomic data has prevented the greenback from running these last few days, although the confirmation of a technical top remains for now, out of the question.
Technically, the daily chart for the USD/JPY shows that the price is now below the 23.6% retracement of its latest advance, whilst the technical indicators have retraced from overbought level and hold far above their mid-lines, implying limited bearish potential at the time being. In the same chart, the 100 and 200 SMA’s converge with the 61.8% retracement of the same rally at 121.50, becoming a critical support during the upcoming days. In the 4 hours chart, the technical indicators diverge from each other in negative territory, but the price remains well above its moving averages. The 38.2% retracement of the mentioned rally stands at 122.30 the immediate support and the level to break to confirm further declines for this Monday.
US Retail Sales
U.S. retail sales rose less than expected in October amid a surprise decline in automobile purchases, suggesting a slowdown in consumer spending that could temper expectations of a strong pickup in fourth-quarter economic growth.
The Commerce Department said on Friday retail sales edged up 0.1 percent last month after being unchanged in September. Economists had forecast retail sales increasing 0.3 percent in October after a previously reported 0.1 percent increase in September.
Considering the overall technical and fundamental outlook, selling the pair around 123.50 level could be a good strategy if we get a valid bearish reversal candle on four-hour timeframe.