In our market analysis last Friday, we pointed out the importance of the region around the November lows around 112.50, and with an NFP reading coming in below expectations, chances are high that a follow through would occur, pushing the USD/JPY currency pair to 111.70, and it is probably lower in the days to come. NFPs came in below expectations, and were grist on the mill for those interpreting the remarks from the FED chairman Powell on the 28 November as dovish. The reading made it clear that it will be very difficult for 10-year US Treasury yields to make it back towards 3%, which should be considered bearish for the US-Dollar not only against the JPY, but on a broad front.
Source: Economic Events 12 December 2018 – Admiral Markets’ Forex Calendar
In combination with the current uncertainty around Brexit, and the scepticism towards the truce between the US and China in terms of trade, one would expect the USD/JPY FX pair to trade significantly lower. The fact that it doesn’t is a clear sign of strength, and with today’s US inflation data probably coming in above expectations, another push higher with a first target around the yearly highs of around 114.50, into the expected quiet end of the month and year seems very likely. From a technical point of view, USDJPY can be considered neutral with a “bullish touch”, as long as we trade above 111.70.
Source: Admiral Markets MT5 with MT5SE Add-on USDJPY chart (between 24 November 2017 to 11 December 2018) – Accessed: 11 December 2018 at 11:00 PM GMT –Please Note: Forecasts such as this are not a reliable indicator of future results, or future performance.
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