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USD/JPY Likely To Face Resistance Near 109.00

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Aayush Jindal

Key Highlights

  • The US Dollar found support near 107.80 andrecovered recently against the Japanese Yen.
  • A key bearish trend line is forming withresistance near 108.85 on the 4-hours chart of USD/JPY.
  • The US Initial Jobless Claims for the weekending June 08, 2019 increased from 219K to 222K.
  • The US Retail Sales in May 2019 could increase0.6% (MoM), better than the last -0.2%.

USDJPY Technical Analysis

The US Dollar remained well bid above 108.00 and recently recovered against the Japanese Yen. The USD/JPY pair broke the 108.40 level, but there are many hurdles for the bulls on the upside.

USDJPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair traded as low as107.81 and recently traded above 108.20 and 108.50. There was even a spikeabove the 38.2% Fib retracement level of the last slide from the 109.92 high to107.81 low.

However, the upward move was capped by the 108.80 resistancearea. Moreover, there is a key bearish trend line forming with resistance near108.85 on the same chart.

Above the trend line, the next resistance is near the 108.90level, and the 50% Fib retracement level of the last slide from the 109.92 highto 107.81 low. The main resistance is at109.00 and the 100 simple moving average (red, 4-hours).

If there is a successful break above 109.00, USD/JPY mightstart a strong increase towards the 110.00 level. Conversely, if the pair failsto clear 108.85 or 109.00, there could be a downside reaction below 108.20.

Fundamentally, the US Initial Jobless Claims figure for theweek ending June 08, 2019 was released by the US Department of Labor. Themarket was looking for a minor decline in claims from 218K to 216K.

The actual result was disappointing, as the US InitialJobless Claims increased to 222K. Moreover, the last reading was revised upfrom 218K to 219K.

The report stated that:

The 4-week moving average was 225,500, an increase of 2,750 from the previous week's revised average. The previous week's average was revised up by 500 from 222,250 to 222,750.

Overall, USD/JPY is facing many hurdles near the 108.85 and 109.00 levels. Therefore, further upsides in the short term are very unlikely. Looking at EUR/USD, the pair is trading well above the 1.1220 support area, whereas GBP/USD is facing a strong resistance near 1.2750.

Economic Releases to Watch Today

  • US Retail Sales May 2019 (MoM) – Forecast +0.6%,versus -0.2% previous.
  • US Industrial Production May 2019 (MoM) –Forecast +0.2%, versus -0.5% previous.
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