Bullish Signs Increasing in USD/JPY As MAs Turn From Resistance to Support

Yesterday the USD was retreating as risk sentiment was mildly positive during the European session, but the risk mood dimmed and the USD resumed the bullish momentum that we have been seeing since Friday. The move was most-apparent against Gold and the Yen which lost around 100 pips against the USD. Commodity dollars also lost ground as Treasury yields rebound from the lows and stocks gave back the gains.

USD/JPY made a break above all moving averages on the H4 chart last week, which was a strong bullish signal since the price has been below them since November. Earlier this week we saw a retreat in this pair as the USD retreated lower, but the 200 SMA (purple) was holding as support.

We have seen three attempts by the sellers, with the last one being yesterday, but they all failed and we decided to open a long-term buy USD/JPY  signal, which is well in profit now. The price started bouncing off that moving average and so the bullish signs are increasing for this pair. The unemployment claims from the US stayed within a reasonable range, which shows that the labour market is doing well, justifying last Friday’s numbers. Below is the jobless claims report:

Weekly Initial and Continuing Jobless Claims

• Initial jobless claims 196K versus 190K estimate
• Prior claims were 183K
• 4-week moving average 189.2K vs 191.75K prior
• Continuing claims 1,688K vs 1,658K expected
• Prior continuing claims were 1,655K

This is a small uptick but in order to get the labor market back into balance, the Fed will want to see something much closer to 300K. I don’t rule out that there’s some kind of unidentified secular trend in claims that are skewing them particularly low but it could simply be that $15/hour jobs aren’t hard to find in most of the country.

USD/JPY Live Chart