Key Highlights
- The US Dollar struggled a lot recently to break an important resistance near 110.00-110.40 against the Japanese Yen.
- There is a crucial bearish trend line in place with resistance at 109.95 on the 4-hours chart of USD/JPY.
- The US Initial Jobless Claims for the week ending Feb 3rd, 2018 declined from 230K to 221K.
- China’s CPI increased 1.5% in Jan 2018, similar to the forecast of 1.5% (YoY).
USDJPY Technical Analysis
The US Dollar failed this week to break a crucial resistance near 110.00-110.40 against the Japanese Yen. The USD/JPY pair is likely approaching a key break either above 110.00 or below 108.50.
This past week, we discussed a major resistance near 110.00-110.40 in USD/JPY. The pair struggled many times around the same resistance and declined towards 108.60. It seems like there were mostly ranging moves between 108.50 and 110.40.
The market consolidated for many sessions and now it seems like the pair is preparing for the next break. On the upside, there is a crucial bearish trend line in place with resistance at 109.95 on the 4-hours chart.
The pair has to break the trend line resistance at 109.95 and settle above the 100 simple moving average (red, 4-hours) to gain upside momentum. However, a proper close above 110.30-40 is must for a follow through towards 111.00.
The 61.8% Fib retracement level of the last decline from the 111.22 high to 108.28 low at 111.10 would act as an intermediate resistance. On the flip side, if the pair fails to move past 110.40, it may perhaps move down and break the lower end of the range at 108.50.
US Initial Jobless Claims
Recently, the US Initial Jobless Claims figure for the week ending Feb 3rd, 2018 was released by the US Department of Labor. The forecast was slated for an increase in claims from the last reading of 230K to 232K.
The actual result was better than the forecast, as there was a decline in claims from 230K to 221K. The report mentioned that:
The 4-week moving average was 224,500, a decrease of 10,000 from the previous week’s unrevised average of 234,500. This is the lowest level for this average since March 10, 1973 when it was 222,000.
Overall, the market sentiment is favoring more gains in the US Dollar. Therefore, there are chances of an upside move in USD/JPY, and on the other hand, declines in EUR/USD and GBP/USD.
