The USD/JPY pair continues to move somehow sideways in the short term. The price action signaled exhausted buyers but it's premature to talk about a corrective phase. It's traded at 127.75 level at the time of writing and it seems heavy as the Dollar Index seems exhausted.
Fundamentally, the Japanese Unemployment Rate dropped to 2.6% from 2.7% which is good for the Yen, while the BOJ Core CPI rose by 1.1% matching expectations. Later, the US data could really shake the price. The CB Consumer Confidence is expected at 108.5, Durable Goods Orders could register a 1.0% growth, while the Durable Goods Orders may report a 0.5% growth. Worse than expected US economic figures could weaken the greenback in the short term.
USD/JPY Strong Sellers!
As you can see on the h1 chart, USD/JPY escaped from the up-channel pattern and now it seems determined to drop deeper. It has retested the broken uptrend line and the weekly pivot point of 128.04 and now it could hit 127.45 critical support.
The descending pitchfork's upper median line (uml) stands as a dynamic resistance. As long as it stays under this line, the USD/JPY could approach and reach new lows.
USD/JPY Outlook!
Making a new lower low, dropping and closing below 127.45 could open the door for a larger drop. A valid breakdown below this obstacle could bring new short opportunities with a potential downside target at the S1 (126.67).
