USD/JPY: Cautious Gains Awaiting US Job Numbers - 5 January 2018

The USD/JPY is considered the best performing among the dollar’s pairs, as despite the drop of the dollar against other majors, it is still the strongest versus the Yen, as it reached the 112.86 level after retreating in the beginning of yesterday’s trading towards 112.45. The US job numbers’ variation between ADP job number changes and the unemployment claims weakened the dollar before the release of the government non-farm jobs report today, which will draw the picture of the close for this week’s pair trading.

There is no doubt that the minutes of the last Federal Reserve meeting helped the USD to achieve gains, as the Federal Reserve maintained the plan of 3 interest rate raise for 2018. The minutes suggested that the low inflation level in the country is transitional and that the job market strength will support facing its implications. The decision makers at the Federal Reserve agreed largely last month that the US tax reform would benefit the economy, however, they split in terms of whether the resulting growth will lead to faster rate raise this year.

Technically: The USD/JPY will have strong bearish move in case it moved towards support at 112.00 and 111.60, and we still prefer buying at each bearish bounce. On the bullish side, the nearest resistance levels are currently at 113.10, 113.75 and 114.30. The daily chart shows clearly a break of the bullish trend lately. It will watch the US Index and Stock Markets with liquidity back to the markets.

On the economic data today: The economic agenda today will focus on the US jobs numbers including the release of the unemployment rate, the non-farm job numbers and the average hourly wages, and then the release of the services ISM index and the factory orders. The pair will closely watch for renewed international geopolitical fears, with the reemergence of the North Korean crises, along with anything related to Trump’s internal and external policies.

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DailyForex.com Team
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