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Dollar Finds Near-term Support on Shaky Grounds; Yen Goes Higher

by on January 13, 2014 6:44 am GMT
 

The US dollar hits its lowest point in six session after the non-farms payroll shows that only 74K jobs were added in December versus expectations of 196K. Many believe the jobs report will hinder further tapering from the Federal Reserve with a small camp thinking that new chair Janet Yellen will increase the quantitative easing . “The surprisingly weak headline payrolls print sparked a large switch in USD sentiment,” said Barclays Capital analysts in a note to clients.

Dollar futures were able to find near-term price action support on rather soft ground. The 1H chart shows minor support on 80.558 while some resistance slightly above at 80.62/65. A break above this some resistance area could allow price to trend higher to the Fibonacci 32.8 percent retracement. This is a confirmed area of resistance with a cluster of rejected candles nearing 80.75. However, the dollar will likely need a catalyst.

If the dollar breaks lower through the trading day, the likely downward target is 80.39 on the 1H chart.

1H Chart of DX

1H Chart of DX

The USDJPY has reached a one month low, down 74 pips to 103.44. The yen has sparked a rally as the dollar pulls back and risk assets take a breather. The USDJPY has been up 10 of the last 11 weeks, and it is likely that the pair will pullback some waiting on cues to go forward. The pair has moved over 200 pips from Friday’s high of 105.33 to its current position.

Yen futures have seen large gains recently. Price action has been currently holding underneath the 200 EMA on the 4H chart, while a break above that could lead to .0097, or 9.7. Yen futures are trending in overbought territory with the +DMI loosing steam, and a pullback to the 50 percent retracement can happen. However, the yen is volatile and correct itself rather quickly. The overall trend should continue higher.

4H Chart of 6J

4H Chart of 6J