Forex Analysis: USD/JPY Weighed Down on Pullback

February 6, 2014 – USD/JPY (daily chart) has continued to be weighed down after hitting a 10-week low of 100.75 earlier this week. That low was preceded by a 4.4% decline from the currency pair’s 5-year high of 105.43, which was established in the very beginning of this year. This decline occurs within what continues to be, for the time being, a longer-term bullish trend extending back to the September 2012 lows near 77.00.

In making the 4.4% pullback thus far, USD/JPY has come close to reaching down towards its major support level at the 100.00 psychological level, which is also where the 200-day moving average currently resides as well as the 61.8% Fibonacci retracement of the last major bullish run.

With the non-farm payrolls report closely approaching on Friday, the pair should find a clearer directional path after its recent pullback. In the event of a downside extension of the pullback, major support continues to reside at the noted 100.00 level. Upside targets on a potential recovery and resumption of the underlying trend reside once again around 103.70 and then the noted 105.43 long-term high.

James Chen, CMT
Chief Technical Strategist
City Index Group

 

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