Monday, May 6, 2019

USD/JPY - 06 May 2019


Fundamental Highlights

The Dollar/Yen fell Friday to close the week at 111.10, its lowest close in almost a month, despite a major rally on US equities on the back of the much better US NFP report. The pair’s decline came after the market realized that the US unemployment rate decline to 3.6% was a result of the participation rate declining to 62.8%, meaning that half million people were no longer looking for employment. During the weekend, Trump said tariffs on $200 billion of Chinese goods will increase to 25% if the deal won’t be done by Friday. This made the Chinese retaliate by potentially cancelling this week’s trade talks after Trump’s comments. These events could potentially change the overall market direction, as the demand on the anti-risk Yen could get stronger.

Technical Analysis

The Dollar/Yen closed very weak on Friday, below the 50/200-day moving averages, signaling a potential downward continuation for this week. Earlier this morning, the pair gapped down at the Asian open breaking below important support levels, reaching towards 110.30 before the buyers stepped in and bounced the pair towards 110.85 as previous support turned new resistance. The bears will be targeting to retest the recent low and potentially breaking lower towards 110 (S2) and 109.70 (S3).

Support: 110.30 / 110 / 109.70
Resistance: 110.85 / 111.10

Chart (H4)