Last week the pair showed volatile trading.
The pair was supported by the Fed decision on interest rates and strong data on the construction sector, labour market and the Consumer Price Index from the US. At the same time, the pair was pressured by the Bank of Japan decision not ease monetary policy further.
Today attention needs to be paid to US data on Durable Goods Orders and the Personal Consumption Expenditures Price Index. Tomorrow data on Unemployment and the National Consumer Price Index is due in Japan.
Support and resistance
The pair is trading in the middle of a wide descending channel, and at the lower border of a narrower, shorter-term ascending channel with the upper border at the level of 125.50. The main scenario remains a price fall to the lower border of the wide channel near the level of 117.00.
On the daily chart, MACD’s histogram is in the negative zone and its volumes are growing. On the weekly chart, the price broke down the middle MA of Bollinger Bands and falling towards its lower MA near the level of 118.00.
The indicators suggest a fall continuation.
Support levels: 120.75, 120.40, 120.00, 119.80, 119.20, 119.00, 118.60, 118.00, 117.00, 116.20.
Resistance levels: 121.30, 121.60, 121.85, 122.50, 123.00, 123.75, 124.10, 124.75, 125.50.
Open short positions from the level of 120.10 with the target at 117.00 and stop-loss at 121.50.