- Back-to-back long-tailed inside day candles signal the USD/JPY pair could be eyeing a bullish move.
- Better-than-expected US wage growth figure could lift USD/JPY to 110.00.
Having defended the key 50-day moving average (MA) for three straight sessions, the USD/JPY pair looks set for a bullish move, the technical charts.
Daily chart
-636634121105810922.png)
The pair created inside day on Wednesday and Thursday - a reversal pattern which indicates the pullback from the recent high of 111.40 has ended. A positive follow-through today would confirm bullish revival.
That said, the pair is more likely to see a positive move today as the long tails/lower shadow of last three daily candles indicates the dips below 108.82 (38.2 percent Fibonacci retracement) and the dips to ascending (bullish) 50-day MA was possibly met by fresh bids.
Further, the previous three candles also show the pair has created higher lows (bullish setup) pattern along the rising 50-day MA.
The price action adds credence to the 50-day MA and 100-day MA crossover confirmed on May 29 and the bullish price-relative strength index (RSI) divergence seen in the 4-hour chart and could yield a rally to immediate resistance 109.26 (4-hour 200 MA).
A convincing move higher to 110.00 could be seen if the US wage growth number betters estimates. The data, due at 12:30 GMT is expected to show the average weekly earnings rose 0.2 percent month-on-month in May vs. 0.1 percent rise seen in April. The annualized figure is seen printing at 2.7 percent vs 2.6 percent previously.
Meanwhile, the pair could drop below the weekly low of 108.11 if the US wage growth number disappoints expectations by a big margin, pushing the probability of a June Fed rate hike below 70 percent. History shows the Fed will go ahead with a rate hike only if the probability stays above 70 percent.
Note - A close below 108.64 (May 4 low) would confirm a bearish-to-bullish trend change (rally from March 29 low of 104.63 has ended and the bears have regained control) and open doors to a deeper sell-off to 107.21 (61.8 percent Fibonacci retracement) - 107.00 (psychological level).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD holds ground after Chinese import data shows rise in April
The AUD/USD continues its losing streak, trading around 0.6580 on Thursday following the Reserve Bank of Australia's less hawkish stance, especially after last week's inflation data exceeded predictions. Nevertheless, the RBA acknowledged that recent progress in controlling inflation has stalled, maintaining its stance of keeping options open.
USD/JPY holds positive ground above 155.50 following the BoJ Summary of Opinions
The USD/JPY pair trades in positive territory for the fourth consecutive day around 155.60 during the Asian trading hours on Thursday. However, the fear of further intervention from the Bank of Japan is likely to cap the downside of the Japanese Yen for the time being.
Gold price gains ground, investors await US data, Fedspeak for fresh catalyst
Gold price trades with a positive bias on Thursday amid the absence of top-tier economic data releases at mid-week. However, multiple headwinds, such as the firmer US Dollar and the hawkish comments from the US Federal Reserve are likely to cap the upside of the precious metal in the near term.
President Biden threatens crypto with possible veto of Bitcoin custody among trusted custodians
Joe Biden could veto legislation that would allow regulated financial institutions to custody Bitcoin and crypto. Biden administration’s stance would disrupt US SEC’s work to protect crypto market investors and efforts to safeguard broader financial system.
US inflation data in the market purview
With next week's pivotal US inflation data looming, we're witnessing a stall in stock market momentum and an uptick in US Treasury yields. This shift comes amid murmurs of hawkish sentiment from Fed speak.