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Aayush Jindal

Key Highlights

  • USD/JPY started a fresh increase after trading close to 104.00.
  • It surpassed a major bearish trend line with resistance near 106.10 on the 4-hours chart.
  • The US Initial Jobless Claims declined from 1,191K to 963K in the week ending August 08, 2020.
  • The US Retail Sales could increase 1.9% in July 2020 (MoM), less than the last 7.5%.

USD/JPY Technical Analysis

After trading close to the 104.00 level, the US Dollar started a fresh increase against the Japanese Yen. USD/JPY gained bullish momentum and climbed above the 105.00 and 106.00 levels.

Looking at the 4-hours chart, the pair surpassed a major hurdle near the 106.20 level and the 100 simple moving average (red, 4-hours). There was a clear break above the 50% Fib retracement level of the key downward move from the 107.54 high to 104.18 swing low.

Moreover, there was a break above a major bearish trend line with resistance near 106.10. On the upside, there is a strong resistance waiting near the 107.50 level.

A successful break above the 107.50 resistance level could open the doors for more upsides towards the 108.00 and 108.20 levels in the near term.

On the downside, there are many supports, starting with 106.50. There is a key support forming near the recent breakout zone at 106.20 and the 100 simple moving average (red, 4-hours). Any further losses may perhaps start a fresh drop towards the 104.00 level in the near term.

Fundamentally, the US Initial Jobless Claims figure in the week ending August 08, 2020 was released by the US Department of Labor. The market was looking for a drop from 1,186K to 1,120K.

The actual result was better than the forecast, as the US Initial Jobless Claims declined to 963K. The last reading was revised up from 1,186K to 1,191K.

Overall, USD/JPY could continue to rise, but it might struggle to clear the 107.50 resistance. Looking at EUR/USD and GBP/USD, both are gaining momentum and likely to rise further.

Upcoming Economic Releases

  • Euro Zone Gross Domestic Product Q2 2020 (Prelim) (QoQ) - Forecast -12.1%, versus -12.1% previous.
  • US Retail Sales July 2020 (MoM) – Forecast +1.9%, versus +7.5% previous.