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Dollar Stays above the 21 Day Simple Moving Average

Dollar

The almighty U.S. dollar is in control over the safe haven Japanese yen. The headline USD/JPY currency exchange rate has reversed higher over the course of February and is trading below the technical upside barrier at 106.92.

Japan’s Jibun bank will publish their monthly manufacturing purchasing managers’ index for February. The initial look came out at 50.6.

PMIs are the theme for Monday as Markit purchasing managers’ indices (PMI) are the main focus. The United Kingdom will publish the monthly Markit purchasing managers’ index as will the United States. The U.S. will also release key monthly Institute for Supply Management (ISM) manufacturing purchasing managers’ index data.

The European Union also has monthly manufacturing Markit purchasing managers’ index data on the calendar. Germany will release their monthly manufacturing Markit purchasing managers’ index. The euro area will also release monthly consumer price index (CPI) data.

Daily US Dollar Technical Analysis (USD/JPY)

Looking at price action on the above USD/JPY daily MT 4 price chart, the dollar has found support at the short-term 21 day simple moving average (SMA). This downside barrier lines up at 105.32 with a daily close below that level opening the door to challenge the two hundred (200) day simple moving average at 105.45 next.

The one hundred day simple moving average at 104.40 then comes into play. A break below the 100 day simple moving average could bring the dollar bears into the USD/JPY Forex market as price action shifts lower.

The 14 day relative strength index (RSI) is just below overbought around 69. With that said, the first upside barrier lines up at 107.00 yen. A daily close above 107 yen opens the door to challenge 107.35 yen next.

Further up is the technical layer in play at 107.60 yen, which is just below the key round number of 108 yen. While above the 21 day simple moving average, the USD/JPY looks constructive for further upside potential.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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