Technical Bias: Strongly Bearish
- USDJPY looks to resume bearish trend following Friday’s US nonfarm payrolls report.
- Key events this week: US FOMC policy meeting minutes and BOJ monetary policy meetings.
The USDJPY was relatively unchanged in Monday’s early session, as the outlook turned bearish following Friday’s US nonfarm payrolls report.
The USDJPY was trading at 118.93 following a 100 pip selloff on Friday. The pair is trading below the 100-day simple moving average. The critical support level is located at 118.32, last week’s low. On the upside, resistance is likely found at 119.77, followed by 120.56.
The dollar is in a broad reversal after the Labor Department said US employers added only 126,000 nonfarm payrolls in March, the lowest rate since December 2013. Economists forecast an increase of more than 200,000. It was the first time since early 2014 that the economy added fewer than 200,000 jobs.
The US dollar plunged nearly 1 percent against a trade-weighted basket of currencies on Friday, closing at 96.67.
Monetary policy could dictate trade flows for the USDJPY this week. In the United States, the Federal Reserve will release the minutes of the March FOMC policy meetings on Wednesday. The minutes are likely to affirm the Fed’s cautious approach to interest rate normalization, despite dropping the word “patient” from its official rate statement.
Meanwhile, the Bank of Japan will issue a monetary policy statement on Wednesday. The BOJ is not expected to introduce additional easing measures in the short-term, although there is still speculation policymakers may do more to boost below-target inflation.