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USD/JPY Signaling Bullish Continuation Above 109.50

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Technical analysis of Forex market

Key Highlights

  • USD/JPY recovered sharply and climbed above the 109.00 resistance area.
  • The current trend is positive, suggesting more gains if the pair surpasses 109.70.
  • The US Initial Jobless Claims for the week ending Jan 04, 2020 declined from 223K to 214K.
  • The US nonfarm payrolls could increase 164K in Dec 2019, less than the last 266K.

USD/JPY Technical Analysis

After a strong decline, USD/JPY found support near the 107.65 area. The US Dollar reversed most losses and climbed back above the 109.00 resistance against the Japanese Yen.

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Looking at the 4-hours chart, the pair rallied sharply above the 108.80, 109.00 and 109.20 resistance levels. More importantly, the pair traded above the 50% Fib retracement level of the downward move from the 109.69 high to 107.65 low.

Besides, there was a close above the 109.00 level and the 100 simple moving average (red, 4-hours). The pair is now trading above the 76.4% Fib retracement level of the downward move from the 109.69 high to 107.65 low.

However, there is a major resistance waiting on the upside near the 109.70 area. If the bulls succeed in pushing USD/JPY above the 109.70 hurdle, there are chances of sharp gains above the 110.00 handle.

Conversely, the pair could retreat from the 109.70 resistance area. An initial support is near the 109.00 level and the 100 SMA. If there is a bearish break below 109.00, the pair could revisit 108.40.

Fundamentally, the US Initial Jobless Claims figure for the week ending Jan 04, 2020 was released by the US Department of Labor. The market was looking for a minor decline in claims from 222K to 220K.

The actual result was better the market forecast, as the US Initial Jobless Claims declined to 214K. Besides, the last reading was revised up from 222K to 223K.

The report added:

The 4-week moving average was 224,000, a decrease of 9,500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 233,250 to 233,500.

Overall, USD/JPY might surge if it clears the 109.70 resistance area. Looking at EUR/USD, the pair is now trading well below 1.1150, while GBP/USD is still above 1.3000.

Upcoming Economic Releases

  • US nonfarm payrolls Dec 2019 – Forecast 164K, versus 266K previous.
  • US Unemployment Rate Dec 2019 – Forecast 3.5%, versus 3.5% previous.
  • Canada’s employment Change Dec 2019 – Forecast 25K, versus -71.2K previous.
  • Canada’s Unemployment Rate Dec 2019 – Forecast 5.8%, versus 5.9% previous.