Daily Market Recap - USDJPY

The US Dollar got some respite against the Japanese Yen after rallying marginally before the New Year celebrations. That said, the USDJPY has been on the decline since September and the trend shows no sign of ending.

Trading volumes were very thin as many investors were out between the Christmas and New Year celebrations. The Forex market was no exception and little activity has left the outlook on the USDJPY unchanged at a lower to a neutral bias.

The main reason behind the Dollar gaining some traction late in the session was news that US Senate Leader Mitch McConnell defied President Trumps bid to increase the covid-19 relief checks to Americans by declining to hold a Senate vote on the proposed bill.

Meanwhile, unemployment data released in the US pointed to a slightly better than expected vision of the labor market with both the continuing jobless claims and initial jobless claims coming in below expectations at 5.219 M and 787 K respectively.

From a technical perspective, the USDJPY has once again tested the 103 marks, the third time in a month, and looks set to cross below imminently. A break under will open the door for a move towards the 102.350 support level, with the main bottoms for the pair at 101.185 and 101.179 in the near term. Traders may look to conservatively short the USDJPY at current price points for a target of 102.874.

(Chart Source: Tradingview 02.01.2021)

The main trend is down on the daily chart, though a trade through 103.656 should change the minor trend to up and provide some momentum to the bulls. Buyers have defended the 103 handles for a while now hoping for a repeat of the dramatic November 9th rally. However, the probability remains low as covid-19 cases continue to soar in the US and Japan, with both countries struggling to contain the recent surges.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.