Key Highlights
- The US Dollar failed to hold gains above 112.20 and declined recently against the Japanese Yen.
- A crucial bearish trend line in place with resistance near 111.85 on the 4-hours chart of USD/JPY.
- The US Initial Jobless Claims in the week ending April 27, 2019 were unchanged from 230K.
- The US nonfarm payrolls in April 2019 could decline from 196K to 185K.
USDJPY Technical Analysis
This past week, the US Dollar spiked above the 112.00 and 112.20 levels against the Japanese Yen. However, the USD/JPY pair failed to hold gains above the 112.00 level and recently corrected lower.
Looking at the 4-hours chart, the pair topped near the 112.40 level, resulting in a false upside break. The pair trimmed most its gains and declined below 112.00 and 111.80. The decline was strong since the pair surpassed the 111.50 level and traded close to 111.00.
A swing low was formed at 111.05 and the pair corrected higher. It climbed above 111.45 and the 50% Fib retracement level of the last decline from the 111.90 high to 111.05 low.
On the upside, there is a strong resistance formed near 111.85 and 111.90. There is also a crucial bearish trend line in place with resistance near 111.85 on the same chart.
A successful close above the trend line and 112.00 is needed for a sustained upward move above 112.20 and 112.40 level in the near term. If not, there is a risk of a downside extension below the 111.00 level in the coming days.
Fundamentally, the US Initial Jobless Claims figure for the week ending April 27, 2019 was released by the US Department of Labor. The market was looking for a decline in claims from 230K to 215K.
However, the result was disappointing since there was no change from 230K in the US Initial Jobless Claims. Therefore, the 4-week moving average increased by 6.5K to 212.5K.
The report added:
The advance number for seasonally adjusted insured unemployment during the week ending April 20 was 1,671,000, an increase of 17,000 from the previous week’s revised level.
Overall, the USD/JPY pair seems to be trading in a broad range below the key 112.00 resistance, but today’s NFP release in the US could trigger the next crucial break either above 112.00 or below 111.00.
Economic Releases to Watch Today
- Euro Zone CPI for April 2019 (YoY) (Prelim) – Forecast +1.6%, versus +1.4% previous.
- Euro Zone Core CPI for April 2019 (YoY) (Prelim) – Forecast +1.0%, versus +0.8% previous.
- US nonfarm payrolls April 2019 – Forecast 185K, versus 196K previous.
- US Unemployment Rate April 2019 – Forecast 3.8%, versus 3.8% previous.
- US ISM Non-Manufacturing Index April 2019 – Forecast 57.0, versus 56.1 previous.
