USD/JPY Facing Uphill Task Ahead of US NFP

Key Highlights

  • The US Dollar declined recently and broke the 113.20 support against the Japanese Yen.
  • There is a key bearish trend line formed with resistance near 113.30 on the 4-hours chart of USD/JPY.
  • The US ADP Employment Change in Nov 2018 declined from 225K (revised) to 179K.
  • Today, the US nonfarm payrolls figure for Nov 2018 will be released, which is forecasted to decline from 250K to 205K.

USDJPY Technical Analysis

After a solid upward move, the US Dollar faced sellers near the 114.00 zone against the Japanese Yen. Later, the USD/JPY pair started a fresh decline and traded below the 113.50 and 113.20 supports.

USDJPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair traded below a couple of important supports near 113.00 and even settled below both 200 simple moving average (green, 4-hours) and the 100 simple moving average (red, 4-hours).

It traded towards the 112.50 level and later bounced back above 113.00 and the 38.2% Fib retracement level of the last decline from the 113.71 high to 112.57 low. However, the recovery was capped near the 113.20 level and the 100 SMA.

Moreover, the 50% Fib retracement level of the last decline from the 113.71 high to 112.57 low acted as a resistance. Above 113.20, there is a key bearish trend line formed with resistance near 113.30.

Therefore, a convincing break above the 113.30 level and the 100 SMA is needed for buyers to gain traction in the near term. On the downside, the main supports are 112.50 and 112.30, below which there is a risk of more losses below 112.00.

Fundamentally, the US ADP Employment Change for Nov 2018 was released by the Automatic Data Processing, Inc. The market was looking for a change of 195K, less than the last 227K.

US ADP Employment Change Nov 2018

However, the result was disappointing as the change in the ADP Employment was 179K and the last reading was revised down to 225K.

The outcome was disappointing, which weighed on the US Dollar and USD/JPY. On the other hand, EUR/USD and GBP/USD staged a decent recovery.

Economic Releases to Watch Today

  • Euro Zone Gross Domestic Product Q3 2018 (QoQ) – Forecast 0.2%, versus 0.2% previous.
  • Euro Zone Gross Domestic Product Q3 2018 (YoY) – Forecast 1.7%, versus 1.7% previous.
  • US nonfarm payrolls Nov 2018 – Forecast 205K, versus 250K previous.
  • US Unemployment Rate Nov 2018 – Forecast 3.7%, versus 3.7% previous.
  • Canada’s employment Change payrolls Nov 2018 – Forecast 10.0K, versus 11.2K previous.
  • Canada’s Unemployment Rate April 2018 – Forecast 5.9%, versus 5.8% 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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