Is the USDJPY Responding Properly to Today’s Non-Farm Payrolls Report

[vc_row][vc_column][vc_column_text]So today’s Non-Farm Payrolls (NFP) report is out. It shows that US employment change came in at -20,500K (-20.5 million) versus the -22,000K (-22 million) that the markets had predicted. The unemployment rate also rose to 14.7%, but this was not as high as the 16.0% that the markets predicted. The average hourly earnings figures also surprised to the upside. A value of 4.7% easily trumped the market consensus of 0.5%. So this was am NFP report that did not tell the markets what was not already known. The NFP report was excellent because all the parameters came in better than expected, which was good for the US markets and the US Dollar. It shows that the employment situation may not be as bad as the numbers appear to show.

Added to the NFP figures was the announcement of a $20billion Bank of Japan windfall for local landlords. This led to a price explosion on the Nikkei 225. Traditionally, the Japanese Yen drops when the Nikkei 225 is up.
So is the current uptick on the USDJPY justified? It is, considering that we have news that is USD-positive and JPY-negative. Furthermore, we have a falling wedge forming on the daily chart, with the price bouncing off the lower border of the wedge at its intersection point with the lower boundary of the bigger symmetrical triangle.[/vc_column_text][vc_column_text css=”.vc_custom_1585659276156{background-color: #f9f9f9 !important;}”]

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Technical Outlook for USDJPY

The USDJPY is up 0.34% on the day. The pair has added to yesterday’s 0.14% gain and is now challenging the upper border of a narrow falling wedge, after bouncing off the support level formed by the intersection of the lower borders of the wedge and the big symmetrical triangle. 

Today’s resistance at the upper wedge boundary also corresponds to the 106.65 horizontal resistance. A break above this level targets the 107.82 mark, which fulfils the price projection from the breakout point. This move would have to take out resistance levels at 107.03 and 107.82 to become a reality. 

On the flip side, a return towards the wedge’s lower border could result from rejection at the current price level. This would now set up 105.75 as the support target. A breakdown of this target invalidates the wedge and also breaks down the bigger triangle, which opens a door towards new targets at 104.98 and possibly 104.56.

The pair continues to remain subject to coronavirus-induced risk sentiment, and also the proceedings and the outcome of new US-China trade talks. [/vc_column_text][vc_column_text css=”.vc_custom_1565176883833{background-color: #f9f9f9 !important;}”]

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[/vc_column_text][vc_single_image image=”45021″ img_size=”full” add_caption=”yes” alignment=”center” onclick=”link_image” title=”USDJPY Daily Chart”][vc_column_text]More content

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