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Forex pairs in this Article » USD/JPY (Barcelona) - The USD/JPY was under major selling pressure during the latter part of last week as Japanese data and US Fed rumors provided traders all the reason they needed to abandon longs and press shorts. Will those forces stay in place this week?

Japanese data will lead things off and the US will dominate the news flow later in the week

After a week that saw a powerful, news-induced downside reversal in the USD/JPY, traders will once again get to contend with major news items that will certainly push the cross around throughout the week. Early Monday in Japan, retail sales data will be released to kick the week off. Later, Bank of Japan governors will be on the microphone giving their assessment of things. The focus will then shift to the US, where the pending home sales data and the Dallas Fed Manufacturing Survey will be released. The latter part of the week should be the focus of traders’ attention, however, as the US FOMC will release their interest rate decision and comments on Wednesday and the monthly jobs report for the US will be released on Friday.

In addition to all of the short-term influences, there was interesting conversation going on over the weekend surrounding the decision facing Prime Minister Abe on whether to enact his proposed sales tax hike (to address their budget situation) in the coming months or not. Analysts are connecting the dots and deducing that if the tax hike is retracted that inflation will ramp up and the Yen will continue to rally off the recent lows (forcing the USD/JPY lower) .

USD/JPY technical outlook

Some technicians are calling for a move down to 92.53 before the macro bull trend in the cross resumes. Shorter-term support for USD/JPY comes in at the Fibonacci projection of 97.64. Below that level comes the key “bulls’ last stand” or “correction support” at 97.30. Resistance for USD/JPY comes in at previous support / now resistance of 98.88 and is backed up by Thursday’s peak of 100.47.
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