U.S trade balance figures to show increase in deficit
The U.S. trade balance figures for the month of January are set to be published later today during the North American trading session. Economists polled in the survey expect trade deficit to increase to $47 billion, accelerating from the 44.3 billion trade deficit posted in December. In December, the U.S. trade balance was already recorded posting a four-year high in trade deficit and going by today's forecasts, that record is likely to be broken once again.
U.S. economy has been posting a trade deficit
The U.S. economy has been posting a trade deficit for a while, but this data point got the attention of the new U.S. President Donald Trump who, within a few weeks of taking office said that some of the U.S. key's export/import partners were artificially keeping their currencies lower against the U.S. dollar to gain a competitive advantage.
In his rant, the President accused Germany, Japan and Mexico. Therefore, in this context another record in the trade deficit data could potentially spark fresh comments from the President that could weigh on the U.S. dollar and the markets at large.
Today's trade deficit data could potentially shift the short term sentiment in the markets. USDJPY is already showing signs of weakness in its ability to maintain the gains and the current lower high formed is indicative of a near term decline to the downside, which is also validated by the technical bearish flag pattern that could see further weakness, which could be hastened by today's trade balance figures.
How we trade binary?
From a technical perspective, USDJPY is currently breaking out from a bearish flag pattern as shown on the chart. Further declines can be expected on a break out below 113.85 which will see USDJPY test the next lower support at 113.55. A break down below this support will signal a continuation with a minimum target towards 112.80. Therefore, purchase PUT options with a 2100 GMT expiry around 113.85.
Target price: 113.85
Expiry: 21:00 GMT