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Talking Points:

The USD/JPY has declined as much as 119 pips for Tuesday, as JPY Labor Cash Earnings were reported above expectations. JPY Labor Cash Earnings (YoY) (APR) were expected in at 0.3% but were released at an actual 0.5%. With little US Dollar news on this week’s economic calendar, USD/JPY traders will next be looking towards tomorrows JPY Gross Domestic Product figures to provide further direction for the pair. Expectations for JPY Gross Domestic Product Annualized (1Q F) are set at 2.4%.

Technically this morning’s decline was predicated on a breakout below the previous monthly low at 110.23. If this downtrend continues, traders may look for prices to next challenge the standing yearly low found at 108.13.Traders should note that the pair also continues to trade below both its 10 day EMA (exponential moving average) at 110.67 and its 200 day MVA (simple moving average) at 111.86. If this downtrend continues, both of these values may be referenced as points of resistance. Alternatively, if prices begin to reverse in the short term, traders should first look for the USD/JPY to trade back above this 10 day EMA.

What’s next for the Yen? Read our price forecast here.

USD/JPY Daily Chart & Averages

USD/JPY Dives on Increased JPY Labor Earnings

(Created Using IG Charts)

Why and how do we use IG Client Sentiment in trading? See our guide.

Sentiment figures for the USD/JPY remain net-long, but have yet to move to a negative extreme. For Tuesday, IG Client Sentiment figures are reading at +1.71. This values suggests that 63% of traders remain net long the currency pair. Typically sentiment is read as a constrain indicator, which suggests that the USD/JPY may continue to trade lower. In the event that the USD/JPY does decline to new lows this week, traders should look for sentiment figures to reach a negative extreme of -2.0 or more. If the USD/JPY finds support, and retraces higher, sentiment figures may alternatively neutralize or even flip back to a negative reading.

USD/JPY Dives on Increased JPY Labor Earnings

--- Written by Walker, Analyst for DailyFX.com

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