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Aayush Jindal

Key Highlights

  • USD/JPY started a fresh decline below the 109.50 and 109.20 support levels.
  • It broke a key contracting triangle with support near 109.20 on the 4-hours chart.
  • EUR/USD extended its rise towards 1.1990, GBP/USD is showing positive signs above 1.3720.
  • Crude oil price gained pace and traded above the $63.00 level.

USD/JPY Technical Analysis

In the past few days, the US Dollar saw a steady decline from well above 110.00 against the Japanese Yen. USD/JPY broke the 109.20 support zone to move into a bearish zone.

Looking at the 4-hours chart, the pair failed to remain stable and broke many important supports near 109.20. It also broke a key contracting triangle with support near 109.20.

There was a successful close below the 109.00 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours). The pair is now approaching a major support zone near the 108.50 and 108.40 levels.

It is near the 1.618 Fib extension level of the last key upward move from the 108.99 swing low to 109.95 high. If the pair fails to stay above 108.40, there is a risk of a sharp decline in the coming sessions.

On the upside, the first key resistance is near the 109.20 level (the recent breakdown zone). The next major resistance is near the 109.70 and the 100 simple moving average (red, 4-hours).

Fundamentally, the US Initial Jobless Claims in the week ending April 10, 2021 was released yesterday by the US Department of Labor. The market was looking for a decline to 700K.

The actual result was better than the forecast, as the US Initial Jobless Claims declined to 576K. Besides, the last reading was revised from 744K to 769K.

The report added:

This is the lowest level for initial claims since March 14, 2020 when it was 256,000. The previous week's level was revised up by 25,000 from 744,000 to 769,000.

Overall, USD/JPY must stay above 108.40 to start a fresh increase. Besides, EUR/USD and GBP/USD remains in a positive zone above the 1.1920 and 1.3720 levels respectively.

Economic Releases

  • Euro Zone CPI for March 2021 (YoY) - Forecast +1.4%, versus +1.4% previous.
  • Euro Zone CPI for March 2021 (MoM) - Forecast -0.1%, versus +0.4% previous.
  • Michigan Consumer Sentiment Index for April 2021 (Prelim) – Forecast 89.6, versus 84.9 previous.