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USD/JPY Breaks Key Resistance, US NFP Next

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Aayush Jindal

Key Highlights

  • USD/JPY started a fresh increase above the 104.00 and 105.00 resistance levels.
  • There was a break above a major bearish trend line with resistance near 104.40 on the daily chart.
  • EUR/USD broke the 1.2000 support, GBP/USD recovered sharply after testing 1.3565.
  • The US nonfarm payrolls could increase 50K in Jan 2021, up from the last -140K.

USD/JPY Technical Analysis

After trading as low as 102.60, the US Dollar started a fresh increase against the Japanese Yen. USD/JPY struggled near 104.00 for some time, but finally it gained strength for further upsides.

Looking at the 4-hours chart, the pair gained bullish momentum above the 104.50 and 104.80 resistance levels. The pair even cleared a major bearish trend line with resistance near 104.40.

The pair even surpassed the 61.8% Fib retracement level of the key decline from the 105.67 high to 102.60 low. It is now trading well above the 100-day simple moving average (red). The next key resistance is near the 105.65 level and the 200-day simple moving average (green).

Any more upsides may open the doors for a larger increase above the 106.00 and 106.20 resistance levels. If there is a downside correction, the previous resistance near 104.50 and the 100-day simple moving average (red) could provide support.

Fundamentally, the US Initial Jobless Claims in the week ending Jan 30, 2021 was released yesterday by the US Department of Labor. The market was looking for a drop from 574K to 830K.

The actual result was better than the forecast, as the US Initial Jobless Claims declined to 779k. The last reading was revised from 842K to 812K.

Overall, USD/JPY is showing positive signs and it is likely to continue higher towards 106.00. Conversely, gold price is showing bearish signs and it could decline towards $1,780.

Economic Releases

  • US nonfarm payrolls Jan 2021 – Forecast 50K, versus -140K previous.
  • US Unemployment Rate Jan 2021 - Forecast 6.7%, versus 6.7% previous.
  • Canada’s employment Change payrolls Jan 2021 – Forecast -47.5K, versus -62.6K previous.
  • Canada’s Unemployment Rate Jan 2021 - Forecast 8.9%, versus 8.6% previous.
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