The Dollar/Yen closed very strongly on Friday after a very strong NFP job reports. This negates the US Federal Reserve’s recent dovish outlook regarding the US economy, and it only makes things much more unclear. Will the FED re-change their stance and continue raising rates (after a much better than expected job report) or is the slowdown in the US economy much deeper than the NFP data? For today, investors will try to digest this conflicting data in order to develop an appropriate market sentiment.
The Dollar/Yen broke strongly above 109.11 resistance line after a much better than expected NFP data. Short-term momentum has shifted towards the bulls but now they face a very important resistance area. The 109.75, which is the 200-day moving average (orange line), and the 110 (R1) resistance level. If price breaks above those two levels, then the shift of momentum will be confirmed and we could possibly see more gains on this pair. If, however, 109.11 (S1) will be retested and won’t hold as a new support level, then we could possibly see more price weakness towards 108.50 (S2)
Support: 109.11 / 108.50
Resistance: 110 / 111.10