The Dollar/Yen soared on Friday as investors were little swayed by a disappointing U.S. employment report on Friday. Instead, they increased bets that the weak headline number will not sway the Federal Reserve from starting a tapering of its asset purchases as early as November.
On Friday, the USD/JPY settled at 112.232, up 0.593 or +0.53%.
The Labor Department said in its employment report on Friday that nonfarm payrolls increased by 194,000 last month. Economists polled by Reuters had forecast an increase of 500,000 jobs.
The fact that the gain was modest could temper expectations for a swift acceleration in economic growth following an apparent sharp slowdown in the third quarter, but is unlikely to stop the Federal Reserve from starting the process of reducing its monthly bond purchases as soon as November.
U.S. Treasury yields rose sharply on Friday, widening the spread between U.S. Government bonds and Japanese Government bonds, making the U.S. Dollar a more attractive investment.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out the recent top at 112.078 and its February 20, 2020 main top at 112.226. A trade through 110.826 will change the main trend to down.
The minor range is 110.826 to 112.256. Its 50% level or pivot at 111.541 is the nearest support.
The short-term range is 109.113 to 112.256. If the main trend changes to down then its retracement zone at 110.685 to 110.314 will become the primary downside target zone.
Daily Swing Chart Technical Forecast
The early direction on Monday is likely to be determined by trader reaction to 112.232. Friday’s strong momentum into the close is expected to continue on the opening on Monday.
A sustained move over 112.232 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the April 24, 2019 main top at 112.405.
The main top at 112.405 is a potential trigger point for an acceleration to the upside. The daily chart indicates there is no resistance until the December 13, 2018 main top at 113.710.
A sustained move under 112.232 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the pivot at 111.541.
Since the main trend is up, buyers could come in on the first test of 111.541. If it fails then look for the selling to possibly extend into the main bottom at 110.826.