USDJPY Hovers at Falling Trendline Ahead of the US ISM Manufacturing PMI

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Written By: Angeline Feliciano

May 01, 2020, 05:59 BST 05:59

USDJPY

Summary:

USDJPY recouped some of its losses brought about by the FOMC rate decision. Can it break critical resistance with the ISM manufacturing PMI on deck?

Yesterday, USDJPY recouped its losses from the FOMC rate decision on Wednesday. The currency pair rallied from an intraday low of 106.39 to a peak of 107.49. With this, USDJPY is hovering at resistance on the falling trend line. Today’s calendar is mostly blank because of the Labor Day holiday across Europe. However, we do have the top-tier US ISM manufacturing PMI report from the US. Will it spark a rally on USDJPY?

Due at 3:00 pm GMT, the US ISM manufacturing report is expected to print at 36.7 which is significantly lower than the reading for March at 49.1. What this means is that analysts expect a bigger contraction in the manufacturing sector for April as the forecast veers farther away from the 50.0 baseline.

A better-than-expected reading could be bullish for USDJPY. On the other hand, if the report disappoints, the currency pair could fall on the charts.

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USDJPY Outlook

On the 4-hour time frame, it can be seen that USDJPY is testing a confluence of resistance. This price, around 107.15, coincides with the falling trend line (from connecting the highs of April 6, April 8, April 22, and April 23). It also aligns with the 50% Fib level when you draw the Fibonacci retracement tool from the high of April 23 to the low of April 29. Reversal candlesticks suggest that USDJPY may soon retest this month’s lows at 106.34. On the other hand, a strong close above yesterday’s highs at 107.49 could mean that the currency pair is still headed higher. Near-term resistance is at 108.04 where USDJPY topped on April 23.

Written By: Angeline Feliciano

Angeline Feliciano has been trading Forex for over ten years. She has invaluable experience working in FX education companies like BabyPips.com and Learn to Trade as a trader, currency analyst, trading coach, and presenter. Aside from these roles, she has also created intensive educational content on fundamental analysis which is heavily sought after by retail traders. She has taught hundreds of people how to trade the FX market in the Philippines and in Australia. When she is not trading, you can find her in the gym lifting weights.