Big Gap on Open Sees the USD/JPY Explode out of Support
|S1: 109.10||R1: 110. 25|
|S2: 108.75||R2: 111.20|
|S3: 108.20||R3: 114.00|
The USDJPY had a very weak end to the trading week on Friday, dropping through all of the key short-term support levels and extended as low as 107.31. However, the start of the new week brought with it increased strength, with the USDJPY fast approaching the resistance level at 110.25 in a matter of days.
The daily chart shows an opening gap of nearly 40 pips to start the week and although this is not unusual, opening gaps often close not long after the market open. The 1-hour chart is a good example of the strength the USDJPY showed after open, continuing its aggressive move up. We would expect this strength to continue short-term and test the 110.25 resistance level in the next two days.
The start of this week is light on for significant news releases for the USDJPY, with Crude Oil Inventories, Core CPI data and Unemployment Claims in the US all released on Thursday the highlight. US Retail Sales data due for release on Friday will be one for traders to look out for, as it could provide a good indicator of how the US economy is really tracking.