USDJPY Gains Modestly as US Preliminary GDP Beats Expectations
The USDJPY is gaining modestly after the US Preliminary GDP results show that the US economy grew 2.1% on a quarterly basis. This figure was better than the 1.9% consensus figure and was also better than the 1.9% that was registered in the previous figure.
The preliminary GDP does not carry as much market impact as the advanced GDP figure, but in for a pair that has been looking for some positive stimulus all month, the USDJPY seems to be pleased with this figure and is pushing upwards.
The pair is now trading at 109.25, which is a few pips short of the major resistance level at 109.30 (previous highs of August 1 and October 30). The price action also continues to trade within the confines of a rising wedge pattern.
A break of the 109.30 resistance area could take the USDJPY to 109.97, which is where the previous highs of January 23 and May 30 are found. This price level is also going to be intersected at some point in the future by the upper border of the rising wedge. Therefore, this upside break would then have to contend with this wedge border at the next resistance target of 109.97. Continued upside takes the pair above the wedge (thus invalidating it), and also targets the 110.51 price area (cluster of previous lows that formed between Feb 20 – 27 as well as May 21).
On the flip side, price rejection at 109.30 could send the pair lower to retest the 107.79 support level. A break of 109.30 but rejection at 109.97 could lead to a retest of 109.30, but this time as a support. Further downside moves from here could retest 107.79. Below this area, 106.67 could become relevant (June 24 and October 4 prior lows).