USD/JPY: Japan's GDP for the 2nd quarter _07/09/2016

Trading recommendations

Buy Stop 102.40. Stop Loss 101.90. Take-Profit 103.00, 103.50, 104.00, 104.20, 105.00, 106.50

Sell ​​in the market. Stop Loss 102.20. Take-Profit 101.00, 100.60, 100.00, 99.00, 97.50, 95.00


Technical analysis

In response to the weak macro data from the US USD / JPY pair fell 140 points yesterday, and since the beginning of the week - 250 points. The pair rebounded from the upper boundary of the descending channel on the daily chart (level 104.20), and, breaking important support levels are 103.00 (EMA50 daily chart), 102.40 (EMA200 on 4-hour chart), is reduced to the levels of support for 100.60, 100.00 (at least one year and the psychological level).

  USD / JPY The pair is still in the descending channel on the weekly chart with a lower limit, passing near the level of 95.00, below the key resistance level of 104.20 (EMA200 monthly chart).

Tomorrow published important data on Japan's GDP for the second quarter (02:50 (GMT + 3)). Expected is zero growth. If the data will be even weaker, the yen weakened and USD / JPY pair will be corrected after a sharp decline in recent days. Otherwise, the pair USD / JPY will continue to decrease to the levels of support for 100.60, 100.00.

Weak data from the US have significantly reduced the likelihood of increase rates in the US in September. Now the attention of market participants switched to the Bank of Japan meeting (20-21 September). If the bank does not take back any "drastic" measures, the USD / JPY pair breaks through "round" level of 100.00 and will go to the lower boundary of the channel on the daily chart and the mark of 98.00 with the prospect of further decline within the descending channel on the weekly chart. Its lower boundary passes near the level of 95.00.

The reverse scenario is the breakdown of the resistance levels of 103.00, 104.20 and rise to the resistance level 106.50 (Fibonacci 23.6% correction level to reduce vapors in June 2015 with a mark 125.65) 107.35 (EMA200 on the weekly chart, EMA144 on the daily chart).

Support levels: 102.00, 101.50, 100.60, 100.00, 99.00, 97.50, 95.00

Resistance Levels: 103.00, 103.50, 104.00, 104.20, 150.00, 106.50, 107.35


Overview and Dynamics

Yesterday's weak data from the US (the index of business activity in the non-manufacturing sector ISM in the US for August was 51.4 points (compared to 55.5 points in July and the forecast of 55.0). The current value of the indicator of activity in the service sector has been minimal over the last six years and among the worst forecasts) significantly weakened the likelihood of increase in US interest rates in the coming months. Thus, according to CME Group's data in September rate increases the probability is estimated at 18% and 42.9% in December.

Jumped is the price of gold. So, the price of Spot gold added yesterday more than 23 dollars per ounce, close to the mark of $ 1350.00 per troy ounce. Thus, the rise in gold prices may also be indirect evidence of the growth in investor confidence that the Fed will not raise rates in September. This is a negative factor for the dollar and the pair USD / JPY, as well.

Week beginning badly formed for the pair USD / JPY, which has lost 250 points from the opening of trading on Monday. At the last in late August in Jackson Hole Symposium BOJ head Haruhiko Kuroda said that the Japanese central bank is "not hesitate" to take additional mitigation measures to achieve the target level of inflation in Japan, however, the USD / JPY pair continues to decline. In Japan, a relatively negative interest rate has been introduced recently, however, the Japanese economy is actually on the verge of the threat of deflation. Despite the efforts of the Bank of Japan and an extensive program of quantitative and qualitative easing (QQE), the Bank of Japan can not get closer to the inflation target of 2%.

Today at 23:50 (GMT) will be published by Japan's GDP for the 2nd quarter. Expected is zero growth. On Japan's economy accounts for about 10% of global GDP, while Japan's economy itself is the third largest in the world. Weak GDP data increased the likelihood of another extension of stimulus measures from the Bank of Japan, at a meeting of the bank on 20-21 September, which could be the beginning of the change of the growing trend of the yen reversed.