A weaker Yen as USDJPY eyes 110.00

USDJPY, H1 & Daily

Moderate Yen underperformance has remained a theme in markets so far today (February 4), as it had been on Friday (February 1). This floated USDJPY to a 10-day high at 109.90, while EURJPY and AUDJPY are trading near five- and seven-week highs, respectively. The Japanese currency has been underperforming relative to the other main currencies in the wake of the strong US jobs report on Friday, and the slew of other mostly positive US data (ISM, Construction, Michigan, Wholesale), which lifted spirits in equity markets, although Lunar New Year holidays disrupted trading significantly today (China will be closed all week, and South Korea through to Thursday). The perky data followed the dovish shift in the Fed, which is tonic for equity markets, although many economists and analysts are thinking that the Fed may have prematurely shifted to a neutral policy footing.

Following the key break and breach of the 109.00 level post NFP, USDJPY has a key Resistance at 110.00, 110.40 (Upper Bollinger band & 50-day Moving Average) and the 200-day Moving Average and psychological 111.00. Immediate Support can be found at last week’s low 108.80, 108.00 and the January 3 daily low close at 107.60. The Flash low of January 3 (104.75) is a technical outlier but cannot be discounted completely.

Stuart Cowell

Head Market Analyst

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