USD/JPY Facing Significant Hurdles Near 108.80

Key Highlights

  • The US Dollar recovered recently and moved above 107.20 against the Japanese Yen.
  • There is a crucial bearish trend line formed with resistance at 108.45 on the 4-hours chart of USD/JPY.
  • The US Initial Jobless Claims for the week ending Jan 05, 2018 declined from 233K (revised) to 216K.
  • The US Consumer Price Index for Dec 2018 will be released today, which could increase 0.1% (MoM).

USDJPY Technical Analysis

After a sharp decline below 105.00, the US Dollar recovered and moved above 107.20 against the Japanese Yen. The USD/JPY pair is now facing key resistances near 108.50, 108.80 and 109.20.

USDJPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair traded as low as 104.64 and later bounced back above 105.00, 105.80, 106.80 and 107.20. The pair even cleared the 50% Fib retracement level of the last drop from the 111.40 high to 104.64 low.

However, the pair faced a strong resistance near the 109.00-109.10 zone. Besides, there is a crucial bearish trend line formed with resistance at 108.45 on the same chart. Finally, the 61.8% Fib retracement level of the last drop from the 111.40 high to 104.64 low is near 108.85 to act as a solid hurdle.

To recover further, the pair must break the trend line and settle above 109.00 in the near term. If not, there is a risk of a fresh decline below the 107.50 and 107.20 support levels.

Fundamentally, the US Initial Jobless Claims figure for the week ending Jan 05, 2018 was by the US Department of Labor. The market was looking for a decline from 231K to 225K.

However, the result was better than the forecast since the US Initial Jobless Claims declined to 216K. On the other hand, the last reading was revised up from 231K to 233K.

Overall, the US Dollar may struggle to gain traction above 109.00 against the Japanese Yen. Besides, both EUR/USD and GBP/USD are traded with a positive bias this week.

Economic Releases to Watch Today

  • UK Industrial Production for Nov 2018 (MoM) – Forecast +0.2%, versus -0.6% previous.
  • UK Manufacturing Production for Nov 2018 (MoM) – Forecast +0.3%, versus -0.9% previous.
  • US Consumer Price Index Dec 2018 (MoM) – Forecast -0.1%, versus 0% previous.
  • US Consumer Price Index Dec 2018 (YoY) – Forecast +2.2%, versus +2.2% previous.
  • US Consumer Price Index Ex Food & Energy Dec 2018 (YoY) – Forecast +2.2%, versus +2.2% previous.


Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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