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USD/JPY Recovery Faces Hurdle, Oil Price Dives

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Aayush Jindal

Key Highlights

  • USD/JPY started a recovery wave from the 130.40 zone.
  • It is facing a major hurdle near 134.00 and 134.20 on the 4-hours chart.
  • Crude oil price is gaining bearish momentum below the $92.50 support.
  • The US nonfarm payrolls could increase 250K in July 2022, down from 372K.

USD/JPY Technical Analysis

The US Dollar declined heavily below the 135.00 support against the Japanese Yen. USD/JPY traded as low as 130.42 before there was an upside correction.

Looking at the 4-hours chart, the pair settled well below the 135.00 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The pair started a recovery wave from the 130.42 low and climbed above the 132.50 resistance zone. The pair broke the 38.2% Fib retracement level of the downward move from the 137.46 swing high to 130.42 low.

USD/JPY is now struggling to clear the 50% Fib retracement level of the downward move from the 137.46 swing high to 130.42 low.

The next major resistance is near the 134.50 level, above which the pair could accelerate higher. In the stated case, the pair could rise towards the 136.00 resistance zone in the near term.

Conversely, USD/JPY pair might start a fresh decline below the 132.50 support zone. The first major support is near the 132.20 level. Any more losses might send the pair towards the 131.20 zone.

Looking at crude oil price, there was a sharp decline below the $95.00 and $92.50 support levels. The price even traded below the $90.00 level and it seems like the price might accelerate lower towards $85.00.

Economic Releases

  • US nonfarm payrolls for July 2022 – Forecast 250K, versus 372K previous.
  • US Unemployment Rate for July 2022 - Forecast 3.6%, versus 3.6% previous.
  • Canada’s employment Change payrolls for July 2022 – Forecast 20K, versus -43.2K previous.
  • Canada’s Unemployment Rate for July 2022 - Forecast 5%, versus 4.9% previous.
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