Trading the USD/JPY Range

Trading the USD/JPY Range

Trading the USD/JPY Range

USD/JPY ended the day in negative territory following the overnight slide in Asian equities and the mixed U.S. non-farm payrolls report. At first glance, job growth in the month of August was horrid with payrolls rising only 173K versus the forecast of 217K. However the details of the report was not nearly as weak with the unemployment rate falling to 5.1% and average hourly earnings rising to 0.3%. As a result, the losses in USD/JPY were limited and a rebound could occur in the coming week with no major U.S. economic reports scheduled for release. Yet the gains ahead of the September 17th FOMC meeting should be limited as Friday’s jobs number failed to revive rate hike expectations. At this stage, it will be very difficult for the Fed to pull the trigger this month. So the trade is to buy USD/JPY on dips between 118 and 119.50 and to take profit between 120 and 121.

Technically, USD/JPY broke below the 200-day SMA earlier this week and this decline exposes the currency pair to move below 118. Near term support is at the August 25th low of 118.25 with more significant support at 116.20. Resistance on the other hand is at the 200-day SMA near 120.80.

Chart Of The Day

Leave a Comment

Your email address will not be published. Required fields are marked *