USD/JPY – Where to Buy

USD/JPY – Where to Buy

USD/JPY – Where to Buy

Friday’s U.S. labor market report disappointed in a very big way. Only 156K jobs were created in the month of September, down from a revised 167K number in August. This sluggishness in job growth drove the unemployment rate up to 5%, the first increase in 6 months. Average hourly earnings growth increased but less than economists anticipated. Given how quickly and aggressively USD/JPY appreciated, Friday’s report triggered profit taking because as things stand the Fed won’t be able to justify a December rate hike if NFPs fail to rebound to 200K or more next month. Fundamentally we expect USD/JPY found its way below 102.40 and even down to 102. However if USD/JPY gets down to 102 it becomes an attractive buy because the Federal Reserve will still be raising interest rates and December remains an option – we just need to shake out some longs before that happens.

Technically 102 is an important support level for USDJPY but the main area of support is closer to 101.70, where the 50-day and 20-day SMA converge. On the upside, 104 will cap gains for the time being.

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