US Dollar Index outlook - USDJPY Technical

US Dollar Index outlook: The dollar could rally further if US inflation meets forecasts

(Slobodan Drvenica – Windsor Brokers)

US Dollar Index

The dollar maintains firm tone and holding near new 20-year high at 108.40 in European trading on Wednesday, with narrow ranges signaling quiet mode ahead today’s key event – release of US June inflation data.

US consumer prices are expected to rise to 8.8% in June from 8.6% previous month, signaling that Fed’s prior kikes are yet to be effective, but add to expectations for another big rate hike this month that would offer fresh boost to the greenback.

Technical studies on daily chart are firmly bullish but overbought that add to signals of consolidation/correction, which could be materialized on lower than expected CPI numbers.

Otherwise, June inflation at or above forecast would continue to provide lift to the greenback, with Euro’s break below parity level to provide additional support for extension towards Oct 2002 high at 108.74 and Sep 2002 peak at 109.67 that would expose psychological 110 level.

Supports at 106.70/50 (bull-trendline / rising 10DMA / Fibo 38.2% of 103.49/108.40) should ideally contain dips and keep bulls intact.

Res: 108.40; 108.74; 109.67; 110.00.
Sup: 107.65; 107.34; 106.50; 105.94.

Could USDJPY reach a new 52-week high?

(AAATrade Team)

USD/JPY chart

Looking at USDJPY’s chart, we can see that it is clearly in an upward trend, currently trading at around 137.18 which is very close to its 52W high of around 137.75. Today if the upward trend continues, the rate could re-test its resistance level which is located at around 137.75 and if it will be able to pass it, then it will reach a new 52W high level otherwise it should fall towards its support level at around 135.