USDMXN Higher after Mexico Consumer Confidence beat Forecasts
The USDJPY is trading lower as the US Initial Jobless Claims for last week soared to a new record of 6648K, versus the consensus of 3600K and the previous figure of 3283K. The rise in the number of those claiming unemployment benefits for the first time goes a long way to stoke fears of a sharp increase in US unemployment. Recall that Goldman Sachs, the St. Louis Fed President James Bullard and Boston Fed President Eric Rosengren have all warned that unemployment in the US due to the coronavirus-induced shutdowns of businesses would soar dramatically.
This figure also casts a significant spotlight on tomorrow’s Non-Farm Payrolls numbers, where the unemployment rate is projected to rise to 3.8% and the employment change expected at -100K. We may be in for a considerable surprise tomorrow.
Presently, the USDJPY is trading at 107.09, having been under pressure throughout the London Session.
The USDJPY is currently testing resistance at 107.05, which is the site of many lows in 2019 as well as lows seen as recently as 30 March 2020 and yesterday. The steep rise in the number of persons claiming unemployment benefits in the US for the first time is likely to continue to exert downside pressure on this support level. A breakdown of the support opens the door towards the 106.65 price support (lows of 6 September and 7 October 2019). Below this level, further support targets lie at 105.75 (close to the lower border of the long-term symmetrical triangle. The 104.56 support formed by the lows of 26 August 2019 and 13 March 2020 can only become a target if this triangle’s lower border breaks down.
On the flip side, price recovery from a bounce off the 107.05 support allows the USDJPY the chance to target the 107.82 and possibly the 108.42 resistance areas. Further price ascent aims at the 109.30 resistance, with the lower border of the ascending channel also presenting itself as a possible target at 109.70.