The USD/JPY pair crashed as the Japanese Yen Futures rallied in the short term. The price turned to the downside even if the Dollar Index reached a new high today. This is a JPY driven market. It's trading at 144.73 at the time of writing and it seems very heavy as the USD could lose ground versus its rivals as the Dollar Index is bearish again.
Fundamentally, the Japanese Flash Manufacturing PMI came in better than expected at 49.7 above 49.6 points expected. On the other hand, the US data came in mixed. The US Flash Services PMI came in at 51.0 points versus 52.1 points expected signaling a slowdown in expansion, Flash Manufacturing PMI was reported at 47.0 confirming further contraction, while New Home Sales jumped to 714K from 684K above 705K expected.
USD/JPY At Support!
From the technical point of view, the rate crashed after testing and retesting the upper median line (uml) of the descending pitchfork. This stands as a dynamic resistance.
Now, the rate reached the median line (ml) after ignoring the former low of 145.10. After its massive drop, the USD/JPY pair could try to come back to test and retest the broken levels.
USD/JPY Outlook!
The Fibonacci 38.2% level (144.63), the median line (ml), and the S1 (144.48) represent downside obstacles. Dropping and closing below these immediate support levels should announce a further drop and could represent a selling signal with a potential downside target at the lower median line (lml).
