Key Highlights

  • The US Dollar traded higher recently and broke a key resistance at 107.80 against the Japanese Yen.
  • There is a major bullish trend line formed with support at 108.70 on the 4-hours chart of USD/JPY.
  • The US Initial Jobless Claims in the week ending April 21, 2018 declined from 233K (revised) to 209K.
  • Tokyo CPI in April 2018 posted a 0.5% rise (YoY), compared with the +0.8% forecast.

USDJPY Technical Analysis

The US Dollar started a nice upside move from the 105.00 support against the Japanese Yen. The USD/JPY traded in a solid bullish path and moved above a crucial resistance at 107.80.

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During the upside move, the pair broke many hurdles such as 106.50 and 107.00 to move into a bullish zone. More importantly, the pair settled above the 100 (red) and 200 (green) simple moving averages (4-hour).

The upside move was strong and the pair traded close to the 110.00 level. A high was formed at 109.45 before the pair started a downside correction. An initial support is near the 23.6% Fib retracement level of the last wave from the 106.86 low to 109.45 high.

There is also a major bullish trend line formed with support at 108.70 on the 4-hours chart of USD/JPY. The same trend line coincides with the 38.2% Fib retracement level of the last wave from the 106.86 low to 109.45 high.

Therefore, if the pair corrects lower, it will most likely find support above 108.50. On the upside, the pair might make an attempt to break 109.50 to test the 110.00 resistance in the near term.

Recently, the US Initial Jobless Claims figure for the week ending April 21, 2018 was released by the US Department of Labor. The market was looking for a decline from the last reading of 232K to 230K.

However, the actual result was much better as there was a sharp decline in claims to 209K. The last reading was revised up to 233K from 232K. Therefore, the net decline was 24K. The report added that:

The 4-week moving average was 229,250, a decrease of 2,250 from the previous week’s revised average. The previous week’s average was revised up by 250 from 231,250 to 231,500.

Overall, the US Dollar remains supported, which could continue to support more gains in USD/JPY.

Economic Releases to Watch Today

  • Germany’s Unemployment Change for April 2018 – Forecast -15K, versus -19K previous.
  • Germany’s Unemployment Rate for April 2018 – Forecast 5.3%, versus 5.3% previous.
  • UK GDP for Q1 2018 (Preliminary) – Forecast +0.3% (QoQ) versus +0.4% previous.
  • US Gross Domestic Product Q1 2018 (Preliminary) – Forecast 2.0% versus previous 2.9%.

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