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Aayush Jindal

Key Highlights

  • USD/JPY gained bullish momentum above the 110.50 and 111.00 resistance levels.
  • A crucial bullish trend line is forming with support near 110.40 on the 4-hours chart.
  • The US ISM Manufacturing PMI declined from 61.2 to 60.0 in June 2021.
  • The US nonfarm payrolls could increase 690K in June 2021, up from 559K.

USD/JPY Technical Analysis

The US Dollar started a major increase above the 110.00 level against the Japanese Yen. USD/JPY even broke the 111.00 level to move further into a positive zone.

Looking at the 4-hours chart, the pair cleared a connecting bearish trend line at 110.65. As a result, the pair surged above the 111.00 and 111.20 levels. The pair settled nicely above the 111.00 level, and it is now well above the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

It traded to a new multi-week high at 111.62 and it is still trading nicely above many supports. The first major support is near the 111.00 level.

The next major support is near the 110.50 level. There is also a crucial bullish trend line forming with support near 110.40 on the same chart.

On the upside, the pair could accelerate higher above the 111.65 level. The next major resistance is near 112.00 level, above which the bulls might aim a test of the 112.50 level in the near term.

Fundamentally, the US ISM Manufacturing PMI for June 2021 was released yesterday by the Institute for Supply Management (ISM). The market was looking for a minor drop from 61.2 to 61.0.

The actual result was a bit lower than the forecast, as the US ISM Manufacturing PMI declined from 61.0 to 60.0. However, it still indicates a strong expansion in the overall economy.

The report added:

The New Orders Index registered 66 percent, decreasing 1 percentage point from the May reading of 67 percent. The Production Index registered 60.8 percent; an increase of 2.3 percentage points compared to the May reading of 58.5 percent.

Looking at EUR/USD, the pair is showing bearish signs below 1.1900. Similarly, GBP/USD remains at a risk of more downsides below 1.3780.

Economic Releases

  • US nonfarm payrolls for June 2021 – Forecast 690K, versus 559K previous.
  • US Unemployment Rate for June 2021 - Forecast 5.7%, versus 5.8% previous.
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