USD/JPY Drops as US Recession Worries Increase, Gold Gaining on Safe-Haven.

Key Take-Aways

  • Below the 137.50 support, the USD/JPY began a sharp drop.
  • If closing is made below 134.20, it may continue to decline.
  • In Q2 2022, the US Gross Domestic Product fell by 0.9%. (Preliminary).
  • In Q2 2022, the GDP of the Euro Zone could increase by 0.2% (Provisional) (QoQ).

Technical Analysis of USD/JPY

When compared to the Japanese Yen, the US Dollar made a significant move close to the 139.40 area. Below the 137.50 and 136.50 levels, USD/JPY sharply dropped.

The pair even consolidated below the 136.50 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average, as shown on the 4-hours chart (green, 4-hours). A crucial bullish trend line at 136.10 was broken during the drop.

Furthermore, the pair dropped below the 135.00 mark and tried to test the 134.40 support region. The pair is currently recouping losses close to the 134.50 level.

The currency pair is encountering resistance near the 135.00 level on the upside. It could rebound and target the 200 simple moving average (green, 4-hours) or the 50% Fib retracement level of the crucial slide from the 139.39 swing high to 134.34 low.

Additional gains could push the pair closer to the 136.20 level. If there is no improvement, the pair may keep slipping below 134.40.

The next significant support level is 134.00, below which the pair may continue to decline toward 132.50. Any more losses might push the pair closer to the 131.50 area.

Fundamentally, the US Bureau of Economic Analysis published its US Gross Domestic Product report for Q2 2022 yesterday. The market was anticipating a 0.5% small increase in GDP.

The US Gross Domestic Product shrank by 0.9 percent in Q2 2022, therefore the real outcome was dismal (Preliminary). This might be a clear indication that a recession is starting.

When examining EUR/USD, the pair is still having difficulty below the 1.0280 resistance level, but a break to the upside is beginning to show. In addition, the GBP/USD increase gains above the 1.2050 resistance.

Economic News to Trade Today

  • German GDP for Q2 2022 (QoQ) (Preliminary) – Forecast 0.1 percent, down from 0.2 percent in the previous quarter.
  • Euro Zone GDP Q2 2022 (Preliminary) (QoQ) – Forecast 0.2 percent, down from 0.6 percent in the previous quarter.
  • US Personal Income for June 2022 (MoM) is forecasted to increase by 0.5 percent compared to the previous 0.5 percent.
Amogo Solomon is a Broker-Dealer/Market Research analyst and writer in ACT Brokers with a background in Computer Science, Data Analytics, and Forex Broker Dealing. He specializes in Forex Dealing, markets Analysis, Currency research, forex fundamental and technical analysis, and Monitoring of Forex trends, Stocks, Equities, Cryptos, and Commodities. He possesses strong technical and analytical skills and is well known for his entertaining and informative analysis of the global economy, fiat currency, commodities, Stocks, Indexes, Futures, and Options markets. He held a Bachelor's degree in Computer Science and Nanodegree in Programming for Data Science Enterprise.