USD/JPY Sinks Below 108.00 After Disappointing NFP Print
The USD/JPY pair tumbled below 108.00 handle immediately after the release of disappointing headline NFP number.
The US Labor Department reported that the US economy added just 38k new jobs during the month of May, which was way below consensus estimates of 16k new jobs. Meanwhile, the unemployment rate fell to 4.7% (better-than 4.9% expected) and average hourly earnings reported a growth of 0.2% on a month-on-month basis (in-line with expectations).
A highly disappointing headline number eliminates the possibilities of a Fed rate-hike in June, with the CME Group Fedwatch tool showing on 6% probability of a move in June.
The Japanese currency had been surging against its US counterpart on global risk aversion and today's disappointment from the US labor market report now seems to increase the pair's vulnerability to continue drifting lower in the near-term.
Technical outlook
Gregor Horvat, Chief Technical Strategist at EW-Forecast notes, "USDJPY broke sharply higher recently out of a triangle so recent push up was fifth wave, final leg within impulsive wave one that appears completed now after recent strong bearish turn. Current wave down from 111.47 is acting like a small impulse so it's wave a as part of a three wave decline back to 108.30-109.00 area where we expect a new strong bounce in June."
