USDJPY Extends Gains On Upbeat ADP Employment Change Report
The USDJPY extended its gains for the day on this month’s upbeat ADP Employment Change report which showed that the private sector in the US hired 291K people in January as opposed to the 157K that the markets had expected. It was also higher than the previous figure of 199K, registered for December 2019. This number was enough to allow the USDJPY extended its gains for the day marginally, pushing the pair up to 109.747.
The actual number’s deviation from the consensus number was 134K, which was higher than the tradable difference of 42K (previous – consensus) and made the pair good for a 20-30 pip trade. However, the immediate presence of the resistance at 109.70 has capped further upside on the pair, at least for now.
As the financial markets continue to shake off coronavirus-related fears this Wednesday, the safe-haven Japanese Yen continues to remain on offer relative to the US Dollar, leading the USDJPY to post modest gains of 33 pips for the day, which may extend the winning streak for the week into its 3rd day.
The USDJPY needs to see a penetration close by two daily candles above the 109.70 resistance line for the breakout to be confirmed. This will open up the pathway towards previous highs of 20/21 May 2019 at 110.586, making this area the next potential resistance target. Above this level, the 4 March and 29 April highs of 111.947 could come into focus if the pair continues its upside recovery.
On the flip side, failure to breach the 109.70 resistance level could reopen the chance to retest downside targets at 109.30 or even 108.40. The lows of 3 June 2019 as well as 3 January 2020, located at 107.82, may also be considered a potential target if renewed coronavirus fears were to bring back risk-off sentiment into the financial markets.
The USDJPY pair would now look towards the US ISM Non-manufacturing PMI which is due for release in about 2 hours, as well as Friday’s Non-farm Payrolls report.