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USD/JPY Could Retest The Key 108 Resistance

Key Highlights

  • USD/JPY is facing a few key hurdles near 107.80 and 108.00.
  • EUR/USD and GBP/USD extended losses below 1.0820 and 1.2200 respectively.
  • The US Initial Jobless Claims in the week ending May 9, 2020 declined from 3176K to 2981K.
  • The US Retail Sales could drop 10% in April 2020 (MoM), more than the last -8.7%.

USD/JPY Technical Analysis

This past week, the US Dollar started a strong recovery wave from the 105.98 against the Japanese Yen. USD/JPY climbed above 107.00, but it seems to be facing key hurdles near 107.80 and 108.00.

Looking at the 4-hours chart, the pair traded as high as 107.76 and started a fresh decline. It seems like the pair failed to continue above the 200 simple moving average (green, 4-hours).

It broke the 107.50 and 107.40 levels. Besides, there was spike below the 100 simple moving average (red, 4-hours) and the 50% Fib retracement level of the upward move from the 105.98 low to 107.76 high.

On the downside, there are key supports near the 106.60 and 106.40 levels. The 76.4% Fib retracement level of the upward move from the 105.98 low to 107.76 high is also near 107.40.

If the pair fails to stay above the 106.40 support, there is a risk of another test of 106.00. Conversely, USD/JPY might attempt one more time to clear the 107.80 and 108.00 resistance levels. If there is a successful daily close above 108.00, the pair could rally towards 108.80 and 109.20.

Fundamentally, the US Initial Jobless Claims figure for the week ending May 9, 2020 was released by the US Department of Labor. The market was looking for a decline in claims from 3169K to 2500K.

The actual result was disappointing as the US Initial Jobless Claims came in at 2981K. Besides, the last reading was revised up from 3169K to 3176K.

The report added:

The 4-week moving average was 3,616,500, a decrease of 564,000 from the previous week's revised average. The previous week's average was revised up by 7,000 from 4,173,500 to 4,180,500.

Overall, USD/JPY must climb above 107.80 to continue higher. If not, it could revisit 106.00 in the coming days.

Upcoming Economic Releases

  • Euro Zone Gross Domestic Product Q1 2020 (Preliminary) (QoQ) - Forecast -3.8%, versus -3.8% previous.
  • US Retail Sales April 2020 (MoM) – Forecast -10.0%, versus -8.7% previous.
  • US Industrial Production April 2020 (MoM) – Forecast –11.5%, versus -5.4% previous.