USD/JPY Likely To Face Resistance Near 109.00

Key Highlights

  • The US Dollar found support near 107.80 and recovered recently against the Japanese Yen.
  • A key bearish trend line is forming with resistance near 108.85 on the 4-hours chart of USD/JPY.
  • The US Initial Jobless Claims for the week ending June 08, 2019 increased from 219K to 222K.
  • The US Retail Sales in May 2019 could increase 0.6% (MoM), better than the last -0.2%.

USDJPY Technical Analysis

The US Dollar remained well bid above 108.00 and recently recovered against the Japanese Yen. The USD/JPY pair broke the 108.40 level, but there are many hurdles for the bulls on the upside.

USDJPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair traded as low as 107.81 and recently traded above 108.20 and 108.50. There was even a spike above the 38.2% Fib retracement level of the last slide from the 109.92 high to 107.81 low.

However, the upward move was capped by the 108.80 resistance area. Moreover, there is a key bearish trend line forming with resistance near 108.85 on the same chart.

Above the trend line, the next resistance is near the 108.90 level, and the 50% Fib retracement level of the last slide from the 109.92 high to 107.81 low.  The main resistance is at 109.00 and the 100 simple moving average (red, 4-hours).

If there is a successful break above 109.00, USD/JPY might start a strong increase towards the 110.00 level. Conversely, if the pair fails to clear 108.85 or 109.00, there could be a downside reaction below 108.20.

Fundamentally, the US Initial Jobless Claims figure for the week ending June 08, 2019 was released by the US Department of Labor. The market was looking for a minor decline in claims from 218K to 216K.

The actual result was disappointing, as the US Initial Jobless Claims increased to 222K. Moreover, the last reading was revised up from 218K to 219K.

The report stated that:

The 4-week moving average was 225,500, an increase of 2,750 from the previous week’s revised average. The previous week’s average was revised up by 500 from 222,250 to 222,750.

Overall, USD/JPY is facing many hurdles near the 108.85 and 109.00 levels. Therefore, further upsides in the short term are very unlikely. Looking at EUR/USD, the pair is trading well above the 1.1220 support area, whereas GBP/USD is facing a strong resistance near 1.2750.

Economic Releases to Watch Today

  • US Retail Sales May 2019 (MoM) – Forecast +0.6%, versus -0.2% previous.
  • US Industrial Production May 2019 (MoM) – Forecast +0.2%, versus -0.5% 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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