USDJPY Technical Analysis | Forexlive

Last Friday’s NFP report surpassed expectations once again,
extending its record streak to 14. However, the report’s details were less impressive.
Notably, the unemployment rate experienced its largest month-to-month increase
since the pandemic, rising from 3.4% to 3.7%. Additionally, the average number
of hours worked per week decreased slightly, which is often an indication that
employers are reducing hours before resorting to layoffs.

Overall, the report
provided mixed signals that catered to different perspectives. Optimists viewed
the solid job growth positively and saw the higher unemployment rate and the
soft average hourly earnings as signs of decreased labour market tightness that
could alleviate inflationary pressures. Meanwhile, pessimists focused more on
the report’s details rather than the headline number, emphasizing the
significance of trends over absolute figures.

The US ISM Services PMI came out well below expectations at
50.3, barely avoiding contractionary territory. The employment sub-index slipped
into contraction, and the prices paid sub-index decreased substantially,
returning to levels last seen in May 2020. As a result, the market further
priced out hawkish bets on Fed’s hikes.

BoJ’s Ueda repeated that they should continue
with QQE until the inflation target is achieved. Japan struggled with a
deflationary mindset for decades, so the central bank doesn’t seem to be too
much concerned about higher inflation as the other advanced economies.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, the USDJPY seems to be pulling
back into the 138.16 support level
where we can find also the red 21 moving average for
further confluence. The
target for the buyers at the moment is the 142.17 resistance where we can also
see a 61.8% Fibonacci retracement level
from the entire down move since October of last year. We will likely find
buyers on the 138.16 level if the price gets there, while the sellers will wait
at the 142.17 high.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, the price action has become a
bit choppy lately as the market can’t find clarity amid recent economic data.
We can see that at 138.16 support we have also the 38.2% Fibonacci retracement
level for further confluence. We may see the price falling into that support
and find buyers leaning on it targeting the 142.17 resistance.

If USDJPY falls through that support level, the
next one is at the upward trendline where we
can also find the 61.8% Fibonacci retracement level. That’s likely to be the
last line of defence for the buyers as the trend is likely to switch to the
downside in case the price falls through it.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that
USDJPY is finding support at the 139.00 handle in what could end up being a double bottom. The
recent price action has been a bit confusing given that the data hasn’t been good,
and the market priced out hawkish expectations for the June meeting. In such
instances, you would expect USD/JPY to fall, but it started to basically range.
Nevertheless, we have two levels to watch here:

• If the price breaks below the 139.00
  handle, we can expect sellers piling in and extending the fall into the 138.16
  support, if not lower.
• If the price breaks above the 140.00
  handle, we should see the buyers jumping onboard and extending the rally
  towards the 142.17 resistance.