USDJPY rebound taking shape

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By :  ,  Financial Analyst
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

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Related tags: Forex Forex USD JPY

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