The US Dollar (USD) extended upside movement against the Japanese Yen (JPY) on Friday, increasing the price of USDJPY to more than 117.90 following the release of downbeat initial jobless claims news from the United States. The technical bias however remains slightly bearish because of a Lower Low in the recent downside wave on the daily chart.
Technical Analysis
As of this writing, the pair is being traded around 117.97. A hurdle may be noted near 118.80, the swing high of the large bearish pin bar which emerged on the daily chart on January 8th, 2016 ahead of 119.00, the psychological number and then 119.85, the 50% fib level as demonstrated in our daily chart.
On the downside, the pair is expected to find a support around 117.79, the 76.4% fib level ahead of 117.00, the psychological number and then 115.96, the swing low of the last major downside move. A break and daily closing below the 115.96 support area could incite renewed selling pressure towards the 112.00 zone.
US Initial Jobless Claims
The number of Americans filing for unemployment benefits rose to a six-month high last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and major stock market selloff.
Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 293,000 for the week ended Jan. 16, the highest reading since early July, the Labor Department said. It was the second straight week of gains and confounded economists’ expectations for a drop to 278,000.
Trade Idea
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term unless we get a valid bearish reversal candle near key resistance zone.
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