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USDJPY Still Searching for Support- Downside Targets to Watch

USDJPY Still Searching for Support- Downside Targets to Watch

2014-02-03 17:30:00
David Song, Strategist
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Talking Points:

- USDOLLAR Opening Range in Focus Ahead of Non-Farm Payrolls

- Japanese Yen Correction Gathers Pace on Risk Aversion

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10702.17

10725.13

10685.44

-0.09

94.69%

USDOLLAR Daily

Forex_USDJPY_Still_Searching_for_Support-_Downside_Targets_to_Watch__body_Picture_3.png, USDJPY Still Searching for Support- Downside Targets to Watch

Chart - Created Using FXCM Marketscope 2.0

  • Waiting for Opening Range- Favor ‘Buying Dips’ Amid Upward Trend
  • Need Higher High in RSI to Favor Bullish Momentum
  • Interim Resistance: 10,753 (23.6 expansion) to 10,759 (61.8 retracement)
  • Interim Support: 10,561 (100.0 extension)- Closing Basis

Release

GMT

Expected

Actual

ISM Manufacturing (JAN)

15:00

56.0

51.3

ISM Prices Paid (JAN)

15:00

54.0

60.5

Construction Spending (MoM) (DEC)

15:00

0.0%

0.1%

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is struggling to hold its ground following the dismal ISM Manufacturing survey, and the greenback may continue to consolidate during the first full-week of February as the Non-Farm Payrolls(NFP) report is expected to show the U.S. economy adding another 185K jobs in January.

With the monthly opening range in focus, the upward trend may continue to trigger higher highs paired with higher lows over the coming days, and the USDOLLAR may fully retrace the decline from back in November as the Federal Open Market Committee (FOMC) looks poised to deliver another $10B taper at the March 19 meeting.

With that said, we favor ‘buying dips’ in the dollar as the bullish trend continues to take shape, and we would like to see a topside break in the Relative Strength Index (RSI) as well to provide confirmation as well as conviction for further USD strength.

Join DailyFX on Demandto Cover Current U.S. Dollar Trade Setups

Forex_USDJPY_Still_Searching_for_Support-_Downside_Targets_to_Watch__body_ScreenShot040.png, USDJPY Still Searching for Support- Downside Targets to Watch

USDJPY Daily

Forex_USDJPY_Still_Searching_for_Support-_Downside_Targets_to_Watch__body_Picture_1.png, USDJPY Still Searching for Support- Downside Targets to Watch
  • Downside Targets in Focus as RSI Breaks Below Support (37)
  • Interim Resistance: 103.50 Pivot to 103.70 (61.8 retracement)
  • Interim Support: 100.50 (61.8 expansion) to 100.70 (61.8 expansion)

Three of the four components strengthened against the greenback, led by a 0.92 percent rally in the Japanese Yen, and the near-term correction in the USDJPY may gather pace over the near-term as market participants scale back their appetite for risk.

The shift in trader sentiment may continue to drag the dollar-yen lower given its strong correlation with risk, and a the pair may ultimately come up against the upward trendline dating back to the beginning of 2013 as it searches for support.

In turn, we may see a move back towards former resistance around 100.50 - 100.70, and will revisit the trade should we get down there as the deviation in the policy outlook favors a long-term bullish forecast.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

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