USDJPY Rallies Despite Poor Data form the US

The US Dollar (USD) extended upside movement against the Japanese Yen (JPY) on Friday, increasing the price of USD/JPY to more than 122.00 despite the release of worse than expected US data. The technical bias already remains bullish because of a Higher Low in the recent downside move.

Technical Analysis

As of this writing, the pair is being traded around 122.14. A hurdle may be noted near the current levels, the 61.8% fib level ahead of 123.00, the psychological number and then 123.52, the 76.4% fib level as demonstrated in the following daily chart.

On the downside, the pair is likely to find a support around 122.00-121.95, the psychological number as well as 50% fib level ahead of 119.80, the 38.2% fib level and then 118.05, the swing low of the last major dip. The technical bias will remain bullish as long as the 118.05 support area is intact.

US Initial Jobless Claims

The number of Americans filing for unemployment benefits rose to a five-month high last week, but this likely does not signal a deterioration in the labor market as the underlying trend remained consistent with tightening conditions.

Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 282,000 for the week ended Dec. 5, the highest level since early July, the Labor Department said. The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, rose only 1,500 to 270,750 last week.

Claims have now been below the 300,000 threshold, which is normally associated with healthy labor market conditions, for 40 straight weeks. This is the longest stretch since the early 1970s. As the labor market approaches full employment there is probably little room for further declines.

Trade Idea

Considering the overall technical and fundamental, buying the pair around current levels could be a good strategy in short to medium term.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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