USDJPY has taken a steep decline since reaching multi-year highs of 105.43 on January 1. After declining 23 percent in 2013, the yen has seen demand as a safe-haven with emerging market turmoil lingering and poor economic data out of the United States, which has subsequently shifted sentiment on the dollar. The bearish target of 99.75, initiated on January 10, remains intact.
On Sunday, Japan will report fourth-quarter gross domestic product with economists forecasting a 2.8 percent annualized rate, up from a 1.1 percent pace in the previous quarter. Analysts believe Japan will see an initial boost in the economy prior to the increase in sales tax that will be implemented in April.
The daily chart shows the stair-step downward movement in dollar-yen since the trend shifted last month. Price action fell lower after repeated attempts to break resistance at 102.65, while price action was able to find temporary support at 101.60. A pullback could be in order after weekly gains in the yen to 102.25, but the overall trend remains downward.
A break of support at 101.6 would leave 101 wide open with lower support at 100.65. A 20/50 EMA bearish crossover should help facilitate the trend, but next week is full of economic data that will impact USDJPY. Volatility is expected.