USD/JPY Soars From Key Support: Can It Last?
The launch of a North Korean missile over Japan sparked a sharp fall in the USDJPY early in the week, pushing as low as 108.24 before an aggressive reversal saw it rise more than 200 pips in a matter of days. If the strong momentum in the reversal continues, we could see it reach the resistance level at 111.20 before the end of the week.
The USDJPY rejected sharply off the 108.50 support level on Monday and has continued its strong momentum since. The daily MACD signal line has exited the histogram and started to rise, indicating a potential continuation in the move up following the non-farm payroll figures on Friday. Longer-term, the weekly stochastic oscillator has a confirmed cross below the oversold level of 20, adding further weight to the move up.
All interest will be on the Non-Farm Employment change at the end of the week, and we would expect the USDJPY will take a short pause around this level until the release. Barring the result being significantly different to the forecast of 180K, we think that the US dollar could strengthen in the coming weeks and push this pair higher.