Dollar To Yen Forecast: USD/JPY Bias Neutral Post US NFP

Dollar To Yen Forecast: USD/JPY Bias Neutral Post US NFP

3 April 2016, 15:15
Roberto Jacobs

Dollar To Yen Forecast: USD/JPY Bias Neutral Post US NFP

US Dollar exchange rate remained mixed versus Japanese Yen this past week. US NFP figures also failed to help USD/JPY. Can dollar trade down further?

The headline nonfarm payrolls report released this past week by the US Department of Labor showed that a positivve 215K jobs were there in March to boost the U.S. economy. The average hourly earnings also increased by roughly 0.3% on the month, which boosted the U.S. Dollar against the currencies like the Canadian Dollar and the Euro.

The US NFP and hourly earnings exceeded expectations of 205K and 0.2%, respectively. However, one thing went wrong, as the rate of unemployment actually climbed back to 5.0% from the last rate of 4.9%.

Impact on the US Dollar to Japanese Yen eexchange rate

The daily chart of the USD/JPY has been making lower lows and lower highs, while the moving averages are all in the wrong order. So the trend is clearly bearish as things stand. However, there is a small possibility that it may have carved out a short-term bottom in the middle of last month when it failed to break through the prior low around the 111.00/111.10 area.

The false break there suggests the sellers lacked conviction to sell the USD against JPY, perhaps because they were waiting for some fundamental stimulus or may be because the RSI was in a state of bullish divergence. Since then, Janet Yellen has spoken along with several other FOMC colleagues, mostly delivering dovish comments.

Yet, the USD/JPY has refused to penetrate that key support level. And while today’s US jobs report may not be a game changer, the fact that it has topped expectations may suggest that the buyers will step in at a support level such as the 61.8% Fibonacci retracement of the bounce from the March low, at 111.85/7 and defend their ground. While the 111.00/111.10 area holds as support, the bias would remain neutral.


Trade Carefully USD/JPY!

A potential break below this level on a daily closing basis however would end any bullish hopes, while a break above the short-term bearish trend line would be deemed a bullish development. The longer-term outlook remains bearish for as long as the USD/JPY holds below the 116.00/50 area – or unless it posts a clear reversal pattern on its charts elsewhere.

Trade the USD/JPY cautiously while the trend is uncertain.

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