Dollar Extends Rally Against Yen After Strength in Non-Farm Payroll
Dollar extends rally against the Japanese yen after stronger than expected Non-Farm Payroll report. Jobs increased by 132k in June, higher than consensus of 120k. More impressively, May’s job growth was revised strongly higher from 157k to 190k. That made the average job growths in Q2 at 148k, which is slightly better than 142k in Q1. Unemployment rate stays at 4.5% as expected. Dollar’s strength is particularly apparent against the Japanese yen, which is pressured across the board by carry trades. Meanwhile, Euro is relatively steady as supported by cross buying in EUR/JPY which sees the pair continues to surge to new record high.
Also released in US session, Canadian employment report showed 34.8k job growths in Jun, more than double of expectation of 17k. Unemployment rate stayed at 6.1%. USD/CAD spikes lower after the news. Whether the strong down trend in USD/CAD is resuming remains to be seen. But a retest of 30 year low of 1.0468 is likely to follow.
USD/JPY
Daily Pivots: (S1) 122.50; (P) 122.76; (R1) 123.19; More
USD/JPY’s rally from 1.2208 extends further in early US session and touches mentioned 123.55 resistance. At this point, further rally should be seen as long as 122.84 support holds. As discussed before, the correction from 124.13 should have completed at 122.08 already, after drawing support from 122.01/05 cluster support (61.8% retracement of 120.76 to 124.13 at 122.05 and 23.6% retracement of 115.13 to 124.13 at 122.01). Break of 123.55 will confirm such case and bring retest of 124.13 high. However, below 122.84 will turn short term outlook mixed and suggest that consolidation from 124.13 would probably extend further with another test of 122.08 low before completion.
In the bigger picture rise from 115.13 is still in progress with 122.01/05 cluster support (61.8% retracement of 120.76 to 124.13 at 122.05 and 23.6% retracement of 115.13 to 124.13 at 122.01) remains intact. Such rally is treated as resumption of the rise from 108.99, which in turn, is the resumption of whole up trend from 101.66 after interim correction has completed with three waves down from 121.38 to 108.99. Further rally is expected to be seen to next medium term target of resistance zone of 100% projection of 101.65 to 121.38 from 108.99 at 128.72 and 100% projection of 108.99 to 122.17 from 115.13 at 128.31.
However, break of 122.01/05 cluster support will indicate rise from 115.13 has completed and bring deeper correction to next cluster support of 120.76 (38.2% retracement of 115.13 to 124.13 at 120.69). But still, rise from 108.99 is still in force as long as pull back is contained well above 115.13 low.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY, EUR/JPY) here.
Shing-Ip Tsui is the founder and CEO of www.ActionForex.com. ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.