- Summary:
- The US Durable Goods Orders data surprised to the upside, allowing the USDJPY to remain on course to breakout of the long-term triangle.
The USDJPY continues to hold on to gains posted this week after the US Durable Goods Orders for February 2020 showed a better-than-expected increase of 1.2%, as opposed to the 0.1% slump that the markets were expecting. It was also a better reading than last month’s 0.2% drop.
According to data announced by the US Census Bureau on Wednesday, core durable goods orders dropped by 0.6% (minus transportation). This shows that the increase in the IS Durable Goods Orders came from transport equipment, which accounted for an $87.0 billion gain. The USDJPY went up by 13 pips in response to the news and is currently trading at 114.11.
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Technical Outlook for USDJPY
The USDJPY monthly and weekly charts reveal that the pair is now challenging the upper edge of the long-term symmetrical triangle, having benefitted from the risk-off sentiment that has led to US Dollar strength for the majority of March 2020. The pair would need to break the upper triangle border with confirmation coming from a 3% penetration close above this border by the weekly or monthly candles. This move would also take the USDJPY above the 111.947 resistance line.
A break of the triangle to the upside as well as the 111.947 resistance opens up opportunities for the attainment of 114.06, and possible 115.83 if risk-off sentiment continues to dominate the market.
On the flip side, rejection at the triangle’s upper border or the 111.947 resistance provides an opportunity for a retest of support levels at 110.58 or 109.70, with further support areas at 108.42 and 107.82 lurking underneath. These are all former resistance levels that have undergone the S-R flip to function as new support areas.