Key Highlights

  • USD/JPY was rejected near 109.70 and it declined below 109.00.
  • The pair broke a broad range support near 108.50.
  • The US Initial Jobless Claims for the week ending Dec 28, 2019 declined to 222K.
  • The US ISM Manufacturing PMI could increase from 48.1 to 49.0 in Dec 2019.

USD/JPY Technical Analysis

After another rejection near 109.70, USD/JPY declined heavily below 109.00. The US Dollar even broke a broad range with a crucial support near 108.50 against the Japanese Yen.

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Looking at the 4-hours chart, the pair settled below 109.00, the 200 simple moving average (green, 4-hours), and the 100 simple moving average (red, 4-hours).

Recently, the 108.50 area once again acted as a strong buy zone. A low is formed near 108.47 and the pair corrected higher. It traded above the 23.6% Fib retracement level of the downward move from the 109.68 high to 108.47 low.

However, the upward move was limited by 108.80. Moreover, there is a key resistance forming near the 109.00 and 109.10 levels. Besides, the 100 SMA, 200 SMA, and the 50% Fib retracement level of the downward move from the 109.68 high to 108.47 low are near the 109.00-109.20 zone.

Finally, the pair broke the main 108.50 support area and it is currently sliding towards the 108.00 area. A clear break and close below 108.00 may perhaps start a substantial decline. The next supports are near 107.50 and 107.20.

Fundamentally, the US Initial Jobless Claims figure for the week ending Dec 28, 2019 was released by the US Department of Labor. The market was looking for an increase in claims from 222K to 225K.

The actual result was positive, as the US Initial Jobless Claims declined to 222K. Besides, the last reading was revised down from 225K to 224K.

The report added:

The 4-week moving average was 233,250, an increase of 4,750 from the previous week’s revised average. This is the highest level for this average since January 27, 2018 when it was 235,750.

Overall, USD/JPY might correct higher as long as it is above 108.00. Looking at EUR/USD and GBP/USD, both are correcting lower from the 1.1240 and 1.3280 resistances respectively.

Upcoming Economic Releases

  • Germany’s Unemployment Change for Dec 2019 – Forecast 2K, versus -16K previous.
  • Germany’s Unemployment Rate for Dec 2019 – Forecast 5%, versus 5% previous.
  • German CPI for Dec 2019 (YoY) (Prelim) – Forecast +1.4%, versus +1.1% previous.
  • German CPI for Dec 2019 (MoM) (Prelim) – Forecast +0.5%, versus -0.8% previous.
  • US ISM Manufacturing PMI for Dec 2019 – Forecast 49.0, versus 48.1 previous.


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