The USDJPY is lower after data from the ADP showed that the coronavirus pandemic had erased 20,236,000 jobs from the US private sector. This number was slightly less than expected (-20,500,000 was the consensus number). However, it was far worse than the previous reading of -149,000.
Today’s report, which is the data for April 2020, is the first one that has taken into account the effect of the coronavirus-induced shutdowns and lockdowns implemented across the US in an attempt to limit the number of coronavirus infections and the death rate. The United States currently sits in the number one position in terms of the number of new infections and deaths, according to the latest data from Worldometer.
As a result, the US Dollar extended its decline against the Japanese Yen for the third week running and is now trading 0.46% lower at 106.05.
The daily decline of the last three days extends the downside of the pair, after breaking down the descending triangle on the daily chart which I identified in a previous analysis piece several weeks ago.
This decline is now testing the lower boundary of a large symmetrical triangle that is only correctly visible on the weekly and monthly charts. This border is just above the horizontal support formed by prior lows of 4 August and 5 September 2019 at 105.75. A breakdown of the symmetrical triangle’s lower edge by a 3% penetration close below this border on the weekly chart is required to see a further decline on the pair that takes it to the 13 August 2019 and 6 March 2020 lows at 104.98. Below this level, 104.56 and 101.12 (previous lows of 9 November 2019 and 6 March 2020) could become relevant to the scheme of things if the decline continues.
On the flip side, a bounce on the symmetrical triangle’s lower border could result from a failed breakdown attempt. Such a rebound would make 106.65 available for a retest in the first instance. An advance beyond this point targets 107.03 (descending triangle’s lower border). A move to 107.82 invalidates further downside moves from the breakdown of the descending triangle and also brings 108.42 and 109.30 into focus.
The pair continues to be vulnerable to a safe-haven demand battle between the US Dollar and the Japanese Yen.