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USD/JPY Starts Fresh Increase, US GDP Grows 6.4%

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Aayush Jindal

Key Highlights

  • USD/JPY started a fresh increase after trading as low as 107.47.
  • It broke a major bearish trend line with resistance near 108.70 on the 4-hours chart.
  • The US GDP grew 6.4% in Q1 2021 (Preliminary), up from 4.3%.
  • EUR/USD tested the 1.2150 resistance zone, and GBP/USD climbed above the 1.3920 resistance.

USD/JPY Technical Analysis

The US Dollar traded as low as 107.47 before starting a fresh increase against the Japanese Yen. USD/JPY cleared the 108.00 and 108.25 resistance levels to move into a positive zone.

Looking at the 4-hours chart, the pair broke a major bearish trend line with resistance near 108.70. It even cleared the 23.6% Fib retracement level of the downward move from the 110.96 high to 107.47 low.

There was also a break above the 108.80 resistance and the 100 simple moving average (red, 4-hours). An immediate resistance is near the 109.20 level and the 200 simple moving average (green, 4-hours).

The 50% Fib retracement level of the downward move from the 110.96 high to 107.47 low is also near 109.22. A clear upside break above the 109.20 and 109.22 resistance levels could set the pace for a steady increase towards the 110.00 level.

If there is no upside break above 109.22, the pair could correct lower. An initial support is near the 108.50 level. The key support is near 108.25, below which the pair could even trade below 107.47.

Fundamentally, the US Gross Domestic Product for Q1 2021 (Prelim) was released yesterday by the US Bureau of Economic Analysis. The market was looking for a 6.5% increase in the GDP in Q1 2021.

The actual result was close to the market forecast, as the US GDP grew 6.4% in Q1 2021 (Preliminary), up from 4.3%.

The report added:

The increase in first quarter GDP reflected the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic.

Looking at EUR/USD, the pair climbed further to test the 1.2150 resistance. Besides, GBP/USD climbed above the 1.3920 and 1.3940 resistance levels.

Economic Releases

  • German Gross Domestic Product for Q1 2021 (YoY) (Preliminary) – Forecast -3.2%, versus -3.7% previous.
  • German Gross Domestic Product for Q1 2021 (QoQ) (Preliminary) – Forecast -1.5%, versus 0.3% previous.
  • Euro Zone Gross Domestic Product Q1 2021 (Preliminary) (QoQ) - Forecast -0.8%, versus -0.7% previous.
  • US Personal Income for March 2021 (MoM) - Forecast +20.3%, versus -7.1% previous.
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