The theme in recent weeks has been a declining US economy and all of the weak US data have been supporting that. Today was no different in that we saw terrible US Durable Goods and US Consumer numbers come out lower than expected, but we got a mixed from the USD markets. Is it possible that the USD sell off is overextended? I would say maybe so – in the short term. This mixed reaction maybe a signal of a correction before more USD selling continues. With more potentially negative data coming out tomorrow, mainly in the form of US New Home sales, we may see the pair drift higher before taking a dive. So, we will look to short USD/JPY at 115.95 to hopefully catch a continued down move.

Short USD/JPY at 115.95, stop at 116.20, pt1 at 115.75, pt2 at 115.45

If the pair drifts lower and meets the 115.50 level, it may be a good time to buy into a possible bounce as this price area is a major level of support! Here’s a long trade idea in case the pair drifts lower over night:

Long USD/JPY at 115.50, stop at 115.20, pt1 at 115.70, pt2 at 116.00

If any changes or adjustments need to be made at the open of the US session, I will post in the morning now that I have that ability on the new BabyPips.com.

Good luck and good trading!

Update - 8:23 am EST

I underestimated the USD correction with my short idea on USD/JPY at 115.95. The pair went as high as 116.45 before stalling. GDP q/q was just release coming out at 2.2% vs. 1.8% forecast. GDP deflator also came out at 2.2%. There wasn't much of a reaction after the release, so i will be waiting for the New Home Sales number before I make my next move....