The USD/JPY currency pair came under new selling pressure on Friday. … its recent one-week high of about 145.25 &mdash full export ban debugThis rapid shift in momentum showcases just how precarious the position of USD bulls has become. A surprisingly strong read on U.S. employment has markets in a funk today.
Earlier in the day, the USD/JPY currency pair had risen to a one-week high, adding to expectations for traders. New selling appeared as the pair once again closed in on the important 145.25 level, now a key supply area. The latest jobs report in the U.S. caught economists off guard. This shocking data spells a cautionary tale for USD bulls and exerts a bearish influence over the USD/JPY pair.
Market participants are particularly focused on potential technical support around the 144.65 area. This zone includes the 100-period Simple Moving Average (SMA) on the 4-hour chart and overlaps with the 38.2% Fibonacci retracement level. A convincing break below this level could signal a shift in bias back towards bearish traders, raising concerns about the potential for spot prices to decline further.
If the USD/JPY currency pair breaks below 144.65, specialists say that it will likely check the intermediate support point at 143.45. In addition, further downside pressure may push the price to test levels as low as 143.00, the psychologically important level. After all, this doggedly strong trading environment across the board suggests the pair of lackluster currency is still staying well above a month-long low. It can still drop further south to retest that low, which is approximately 142.70 to 142.65.
Market participants continue to be cautious in the market as they wait to see what overnight failure around the 145.25 supply zone means for price action. USD/JPY bulls should be on red alert. They had wanted to maintain the upward trend that was begun on the heels of good news from new U.S. economic indicators. Expectations for the Bank of Japan (BoJ) and the Federal Reserve are on opposite ends of the spectrum. This chronic misalignment exacerbates the speculative boom and bust cycles in currency trading and distorts overall market functioning.