On the daily chart below for USDJPY, we can see that after the little banking crisis in mid-March, the pair sold off aggressively as the market started to price in several interest rates cuts from the Fed by the end of the year and Treasury yields fell markedly. The USD/JPY pair is notoriously correlated with the US Treasury yields, so if yields go up, the pair goes up and vice versa.

Lately we started to get weak US economic data that supported the JPY, but then the NFP report last Friday beat once again expectations and the pair rallied strongly for hundreds of pips. Today we have the US Jobless Claims and if this data misses once again expectations, especially if it’s a big miss, the JPY should appreciate again and we should see the sellers pushing the pair back to the previous low at 129.91.

USDJPY technical analysis

On the 4 hour chart below, we can see that the rally after the NFP report stalled at the previous high at 133.77 where we have also the confluence from the 50% Fibonacci retracement level. This is clearly a strong resistance, so the buyers will want to see it being breached before piling in and push the price to new higher highs. The latest rejection may also turn into a double top, but we likely need to see US data to weaken again to confirm it.

On the 1 hour chart below, we can see that the recent bullish momentum has faded as the price broke below the trendline that was defining it. Now we have a possible little ascending triangle pattern with moving averages crossed to the downside. The near-term momentum is bearish, so if we see the price breaking below the black trendline, we should see the sellers piling in and pushing the price possibly to the previous low at 130.65. Watch out for today’s US data.