USD/JPY Remains In Downtrend Below 109.00

Key Highlights

  • The US Dollar declined heavily and settled below the key 109.00 support against the Japanese Yen.
  • If USD/JPY corrects higher, it is likely to face a strong resistance near 108.80 and 109.00.
  • The US Initial Jobless Claims for the week ending June 01, 2019 remained stable at 218K.
  • The US nonfarm payrolls in May 2019 could rise 185K, less than the last 263K.

USDJPY Technical Analysis

In the past few days, there were steady losses in the US Dollar below 110.00 against the Japanese Yen. The USD/JPY pair remained in the bearish zone and recently settled below the key 109.00 support.

USDJPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair declined heavily below 108.80 and 108.50. The decline was such that the pair traded to a new monthly low below 108.00. A swing low was formed at 107.81 before it started consolidating losses.

The pair recovered above 108.00 and tested the 23.6% Fib retracement level of the downward move from the 109.92 high to 107.81 swing low.

If there is an upside correction above the 108.50 and 108.60 levels, the pair could recover towards the main 109.00 resistance area. There is also a major bearish trend line forming with current resistance near 109.10 on the same chart.

Besides, the 50% Fib retracement level of the downward move from the 109.92 high to 107.81 swing low is also near the 108.87 level to act as a resistance.

Therefore, if USD/JPY corrects higher, sellers are likely to defend the 108.80 and 109.00 resistance levels. If there is a successful close above 109.00, the pair could start a strong upward move.

Conversely, if the pair fails to recover above 108.80 or 109.00, it could resume its downward move below the 108.00 level.

Fundamentally, the US Initial Jobless Claims figure for the week ending June 01, 2019 was released by the US Department of Labor. The market was looking for no change from the last reading of 115K.

However, the actual result was neutral since there was no change from the last reading, but the last reading was revised up from 215K to 218K.

The report stated that:

The 4-week moving average was 215,000, a decrease of 2,500 from the previous week’s revised average. The previous week’s average was revised up by 750 from 216,750 to 217,500.

Overall, USD/JPY needs to recover above the 108.80 and 109.00 resistance levels to start a fresh upward move. If not, there is a risk of more downsides below 108.00.

Economic Releases to Watch Today

  • US nonfarm payrolls May 2019 – Forecast 185K, versus 263K previous.
  • US Unemployment Rate May 2019 – Forecast 3.6%, versus 3.6% previous.
  • Canada’s employment Change payrolls May 2019 – Forecast 8.0K, versus 106.5K previous.
  • Canada’s Unemployment Rate May 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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