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The USD/JPY pair rallied in the short term as the Dollar Index managed to rebound while the Yen was weakened by the Japanese Yen Futures drop. The price was located at 127.69 at the time of writing far above 126.36 last week's low.
The currency pair went up, even though the US reported poor data last week. Tomorrow, the Japanese economic data could be decisive. Housing Starts could report a 2.5% growth, Consumer Confidence is expected at 33.9 points, Retail Sales could report a 2.6% growth, Unemployment Rate could remain steady at 2.6%, while the Prelim Industrial Production may report a 0.1% drop.
The US CB Consumer Confidence may drop from 107.3 to 103.9, while the Chicago PMI and the HPI could come in worse compared to the last reporting period.
As you can see on the h4 chart, the price action developed a Falling Wedge pattern. Still, an upwards movement is far from being confirmed. Actually, the bearish pressure remains high as long as it stays under the downtrend line and below the median line (ml).
Its false breakdowns below 126.94 former low signaled exhausted sellers. Now, it has rebounded, but it's premature to talk about a larger growth. Only a valid breakout above the near-term resistance levels could signal more gains.
Jumping, closing, and stabilizing above the 128.00 psychological level activate further growth. Failing to reach and retest the downtrend line and the median line (ml), or registering only false breakouts above these levels could announce a new sell-off at least towards the 126.94.
Personally, I would like to see a new sell-off before the USD/JPY pair confirms the Falling Wedge pattern.
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