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USD/JPY: bears taking control, watch key 118.70

FXStreet (Guatemala) - USD/JPY is testing the downside having printed a low of 119.08 so far.

The greenback is broadly weaker on the back of poor US data. While it is widely expected that the Fed is unlikely to hike rates in October, US data collected over the next few months are going to be key for the December decision making process, given that the Fed will be unable to hike rates in November as well.

US data disappointments

Today, PPI was -0.5% m/m vs -0.2m/m with prior at 0.0%. Retails sales were 0.1% vs 0.2% expected m/m and prior were 0.2% but revised to 0.0%.

USD/JPY bulls saving grace

However, not all is lost for the bulls. In Japan, the Government lowered its assessment of the economy to being in recovery whilst also saying that industrial production is weakening. However, Amari said there had been no decision made yet on whether new stimulus measures are needed for the economy. The Nikkei closed -1.89%.

USD/JPY levels

Technically, while USD/JPY is testing the downside, the next major area of support to monitor are on a break of the 119 handle is 118.70/75(Mar-May support). The August 24 low at 116.20 is the next major support on the wide with the topside resistance levels at 119.85, 120.35, 120.88 (200 DMA), 121.00 (50 DMA) and 121.20/30 (55 DMA).

USD/JPY chart pattern

Note the symmetrical triangle on daily chart and a break of the key levels on the wide, 118.60 and JPY121.60 with the four-month level at 125.40 and the August 24, lows of 116.20.

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