f this area keeps gains in check, price could head back to the previous lows at 111.00 or perhaps much lower. A higher pullback to the 61.8% Fib at 115.50 could still be possible but this might be the line in the sand when it comes to a correction. A break above this area or the 200 SMA could mean the start of a reversal.
Also, the 100 SMA is safely below the 200 SMA for now so the downtrend is likely to carry on. Stochastic is already indicating overbought conditions and so is RSI, which means that bearish momentum could pick up soon.
Event risks for this setup include BOJ Governor Kuroda’s speech in parliament, as he might have some remarks concerning yen strength. Recall that Japanese authorities have recently pointed out that they’re watching the yen’s FX moves closely and with urgency, leading to speculations of potential currency intervention.
Data from the US came in stronger than expected on Friday, as the headline retail sales figure logged in a 0.2% gain versus the projected 0.1% uptick while the core figure indicated a 0.1% uptick instead of staying flat. Import prices showed a smaller than expected 1.1% decline compared to the estimated 1.4% slide.
