USDJPY Surges on US Data, Yen Jumps of Cliff

by on December 6, 2013 5:44 pm GMT

The dollar traded down from the session highs after the strong employment data out of the US but is continuing to hold modest gains. Meanwhile, equities skyrocket through worries of a taper, and that made yen futures jump of a cliff. The result: USDJPY up 109 pips.

The free fall in yen futures, and they are looking to retest the monthly low:

4H Chart of Yen Futures

4H Chart of Yen Futures

The daily chart of USDJPY shows that price rounded out a support level at 101.67 and quickly rebounded. Momentum remains strong with an ADX of 32, and the +DMI is ticking up at 27.

Look to see the action at the end of the session. The yen is likely to remain lower throughout 2013, but geo-political risk in Washington D.C. could give the yen a little support as December winds down.

Look for a retest of price action resistance at 103.45. Be sure to see were the session’s close is printed. If it is off the top of the range on profit taking, a slight pullback could be in order.

If 103.45 is broken in the coming week, the year high of 103.72 is next in line.

1D Chart of USDJPY

1D Chart of USDJPY

Considering the all out attempts by the BoJ, the yen will weaken throughout the first quarter of 2014. Look for USDJPY to trade up to 105.