USDJPY starting to confirm breakout?
Hi traders, Friday’s employment data had a mixed effect on the USD. Prices were mainly lower, the USDJPY fought back from lows to finish Friday session flat. The fightback was mainly helped by a weaker Yen as traders continued to move away from the safe-haven.
Price opened with a lower gap this morning and buyers quickly filled the gap adding 23 pips to this mornings high. Currently, sellers have reappeared taking 16 pips off the rally. The USDJPY remains in positive territory after breaking out of a wedge on Thursday. Buyers also broke above 106.75 resistance. This level had been holding buyers back for close to 5 weeks.
Friday’s session and this morning’s low have started to form support at 106.75 turning previous resistance into support. For now it’s not confirmed but it’s starting to show signs. This is a good sign for the USDJPY as when you see this after a breakout it can show buyers are still in numbers and that the breakout could be starting to develop into a new trend. For now, we want to see 106.75 continue to show support. If sellers are able to move price back below Friday’s low this could show buyer demand abating. If the level can hold and buyers can continue to extend higher we would think that the next upside target could be a retest of the downtrend line around 107.55/60
Tonight is quiet on the data front but the USD sees key data later in the week, Wednesday PPI and Core PPI, Thursday CPI and Core CPI and Friday Retail Sales and Core Retail Sales.