Growth data for the Japanese economy was released this morning that showed a contraction for the third consecutive quarter, with GDP down 28.1% in Q2 2020 – numbers adding to the pressure on Shinzo Abe’s successor as prime minister.
Today the US markets are back to work after the long weekend for Labor Day.
The US dollar has recently suffered from severe weakness due to stimulus measures becoming bogged down in Congress and mixed economic indicators, but the greenback may benefit from Japan’s weak data and continue its upward correction.
Looking at the chart, we notice that USDJPY is trading below a descending trend line, whether in the short, medium or long terms, and is currently testing the upper line of a symmetrical triangle pattern on the 1-hour time frame. If it crosses this line, we may see it targeting 106.50 and then 107.00 levels.
If it fails to breach the symmetrical triangle up, this could push the pair to visit 106 levels again; if it breaks these, we may see it heading to 150.60 / 105.30 levels.