USDJPY Now Teasing a Pullback
This pair moved bullishly last week and even reached a 6-year high (105.699) as US economic indicators pointed towards further signs of an economic recovery. During August, the US Manufacturing sector expanded at its fastest rate since March 2011 during August. This was positively for 3Q GDP data and raised expectations for a strong US job report to conclude the week.
However, an unusually weak US jobs report on Friday raised a few eyebrows regarding how the Federal Reserve might react to a weak employment report and encouraged the USDJPY to pullback from the milestone 6 year high.
Before next Friday’s US Advance Retail Sales release, the week is dominated by more regular Japanese news. This includes the latest BoJ Meeting Minutes, Factory Orders and a speech by BoJ Governor Kuroda in the late hours of Thursday evening. The BoJ have expressed consistent confidence throughout 2014 that monetary goals remain achievable. A reiteration of this stance from the BoJ this week should help the JPY.
From a technical standpoint on a Daily timeframe, a bullish trendline is in control.
However, both the Stochastic Oscillator and RSI are now suggesting that a pullback is now forthcoming. From a fundamental perspective this is supported by the US employment report pausing the Greenback rally, as well as the BoJ likely maintaining confidence that monetary goals are achievable. Potential support levels can be found at 104.644 and 104.259.