USD/JPY Gaining Bullish Momentum, US NFP Report Next

Key Highlights

  • The US Dollar gained momentum above the 106.80 resistance against the Japanese Yen.
  • USD/JPY broke a crucial bearish trend line with resistance near 106.50 on the 4-hours chart.
  • The US ISM Non-Manufacturing PMI increased from 53.7 to 56.4 in August 2019.
  • The US nonfarm payrolls in August 2019 could increase 158K, less than the last 164K.

USD/JPY Technical Analysis

After forming a strong support near 105.65, the US Dollar started an upward move against the Japanese Yen. The USD/JPY pair broke a few important resistances near the 106.00 and 106.50 levels to move into a positive zone.

USD/JPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair settled nicely above the 106.00 pivot level and the 100 simple moving average (red, 4-hours). It opened the doors for more gains above the 76.4% Fib retracement level of the downward move from the 106.68 high to 105.73 low.

Moreover, there was a break above a crucial bearish trend line with resistance near 106.50 on the same chart. Finally, the pair broke the last swing high at 106.68 and even surpassed the 107.00 resistance area.

The pair traded nicely above the 1.236 Fib extension level of the downward move from the 106.68 high to 105.73 low, plus the 200 simple moving average (green, 4-hours).

USD/JPY is now trading above a couple of important resistance and it seems like it could continue to rise in the near term. The next resistance could be 107.50 or 107.65.

Conversely, if the pair fails to settle above 107.00, there could be a fresh bearish reaction. An immediate support is at 106.80 and the 200 SMA. The main support is now near 106.50 (the recent breakout resistance).

Fundamentally, the US ISM Non-Manufacturing PMI for August 2019 was released by the Institute for Supply Management (ISM). The market was looking for a minor rise from the last reading of 53.7 to 54.0.

The actual result was better than the forecast, as the US ISM Non-Manufacturing PMI increased to 56.4 in August 2019, representing continued growth in the non-manufacturing sector, at a faster rate.

The report added:

The Non-Manufacturing Business Activity Index increased to 61.5 percent, 8.4 percentage points higher than the July reading of 53.1 percent, reflecting growth for the 121st consecutive month. The New Orders Index registered 60.3 percent; 6.2 percentage points higher than the reading of 54.1 percent in July.

Overall, USD/JPY is gaining bullish momentum above key resistances. More importantly, there was a strong upward move in major pairs, including EUR/USD, GBP/USD, AUD/USD and NZD/USD.

Upcoming Economic Releases

  • Euro Zone Gross Domestic Product Q2 2019 (QoQ) – Forecast 0.2%, versus 0.2% previous.
  • Euro Zone Gross Domestic Product Q2 2019 (YoY) – Forecast 1.1%, versus 1.1% previous.
  • US nonfarm payrolls August 2019 – Forecast 158K, versus 164K previous.
  • US Unemployment Rate August 2019 – Forecast 3.7%, versus 3.7% previous.
  • Canada’s Net Employment Change August 2019 – Forecast 15.0K, versus -24.2K previous.
  • Canada’s Unemployment Rate August 2019 – Forecast 5.7%, versus 5.7% 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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