USD/JPY Hesitates, But Further Gains Likely

Key Highlights

  • The US Dollar climbed higher recently, but it failed near the 110.15 resistance against the Japanese Yen.
  • Earlier, there was a break above a bearish trend line at 109.60 on the 4-hours chart of USD/JPY.
  • The US Initial Jobless Claims for the week ending Feb 02, 2019 declined from 253K to 234K.
  • Canada’s Employment Figure for Jan 2019 will be released today, which could change by 8K.

USDJPY Technical Analysis

Earlier this week, there was a decent upward move in the US Dollar above 109.50 against the Japanese Yen. The USD/JPY pair traded above the 110.00 resistance before starting a downside correction.

USDJPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair traded gained momentum once it broke the 109.50 resistance plus the 100 (red) simple moving average (4-hours) and 200 (green) simple moving average (4-hours).

Besides, there was a break above a bearish trend line with resistance at 109.60. The pair finally broke the 110.00 resistance and topped at 110.16. Later, there was a downside correction below 109.80 and the 23.6% Fib retracement level of the last wave from the 108.49 low to 110.16 high.

However, there are many supports on the downside near the 109.50 level (the previous resistance). Moreover, the 100 (red) simple moving average (4-hours) is near 109.35 and the 50% Fib retracement level of the last wave from the 108.49 low to 110.16 high.

Therefore, dips from the current levels could find a strong support near 109.50 or 109.35. On the upside, the pair must successful settle above 110.20 to gain strength towards 110.50 and 111.00.

Fundamentally, the US Initial Jobless Claims figure for the week ending Feb 02, 2019 was released recently by the US Department of Labor. The market was looking for a decline in claims from 253K to 221K.

However, the result was lower than the forecast as the claims declined to 234K, less than the 221K forecast. The report added that:

The advance number for seasonally adjusted insured unemployment during the week ending January 26 was 1,736,000, a decrease of 42,000 from the previous week’s revised level. The previous week’s level was revised down by 4,000 from 1,782,000 to 1,778,000.

Overall, EUR/USD and GBP/USD faced an increased selling pressure this week, which could support more gains in USD/JPY in the near term.

Economic Releases to Watch Today

  • Germany’s Trade Balance for Dec 2018 – Forecast €18.4B, versus €19.0B previous.
  • Canada’s Employment Change Jan 2019 – Forecast 8.0K, versus 9.3K previous.
  • Canada’s Unemployment Rate Jan 2019 – Forecast 5.7%, versus 5.6% 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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