This week is rich in hot news which will guide the course of the US Dollar. The most important report we are awaiting is the Job Report on Friday. The Federal reserve is also waiting for it as it would influence their decision for a March rate hike. Furthermore, the markets are worried about new policies by President Trump regarding the central bank and rate increases, though most traders are still optimistic based on Yellen’s previous statement that the market pricing is at an 80 percent probability of a rate increase on March 15.
The USD/JPY recorded its highest levels in a year at 118.59, then it declined to trade inside the downside price channel which began on January 12. The USD touched its highest limit last Friday and formed an engulfing bearish candle; now it’s trading at 113.75 and is expected to rally further down in the next few hours.
In the short term we have a wave from 111.65 to 114.75 and expect that the pair will decline to 50% fibo and then at 61.8% as a first target. The MACD indicator is still giving us the sell signal so we have to enter the market now.
The Next Few Days
Based on this analysis we can sell the pair now at 113.85 - especially after we see the engulfing candle which supports the down trend. We need to keep our first target at 113.20 which is a cross area between 50% and the SMA 50, and the second target at 112.60.
We have to be careful about the upcoming hot news like the ADP Non-Farm Employment Change on Wednesday and the Job Report and Employment Change on Friday from the US.
