USD/JPY – Yen Rally Continues on Weak US Numbers

The Japanese yen continues to post gains on Thursday. In economic news, there are no Japanese releases. In the US, today’s key event is Unemployment Claims.

The yen has enjoyed an outstanding week, having surged a remarkable points against the US dollar. This follows sharp losses by the yen late last week, following the surprise move by the BOJ to adopt negative interest rates for the first time in its history. The Japanese yen has joined most currencies in posting strong gains against the US dollar this week, benefiting from disappointing US data. ADP Nonfarm Payrolls dropped to 205 thousand in January, much weaker than 257 thousand a month earlier. There was further weak data from ISM Non-Manufacturing PMI, a key gauge of the services sector. The index dipped to 53.2 points in January, its worst showing since March 2014. Unemployment claims rose unexpectedly to 285 thousand, above the forecast of 279 thousand. The week wraps up with Nonfarm Payrolls, a crucial indicator which can have a strong impact on the movement of AUD/USD. The markets are braced for a sharp drop in the January report, and if this occurs, we could see the euro rally continue on Friday.

USD/JPY Fundamentals

Thursday (Feb. 4)

  • 2:15 US FOMC Member Eric Rosengren Speaks
  • 7:30 US Challenger Job Cuts
  • 8:30 US Unemployment Claims. Estimate 279K
  • 8:30 US Preliminary Nonfarm Productivity. Estimate -1.5%
  • 8:30 US Preliminary Unit Labor Costs. Estimate 3.9%
  • 10:00 US Factory Orders. Estimate -2.5%
  • 10:30 US Natural Gas Storage. Estimate -170B

Upcoming Key Events

Friday (Feb. 5)

  • 8:30 US Nonfarm Employment Change. Estimate 189K
  • 8:30 US Average Hourly Earnings. Estimate 0.3%

*Key releases are highlighted in bold

*All release times are EST

USD/JPY for Thursday, February 4, 2016

USD/JPY February 4 at 6:25 EST

Open: 118.17 Low: 117.33 High: 118.21 Close: 117.55

USD/JPY Technical

S3 S2 S1 R1 R2 R3
114.65 115.90 116.88 118.53 119.58 120.40
  • USD/JPY was steady in the Asian session and has posted slight losses in European trade.
  • 119.58 has switched to a resistance role following gains by the yen. This is a weak line which could see more action during the day.
  • 118.53 is providing support
  • Current range: 118.53 to 119.58

Further levels in both directions:

  • Below: 116.88, 115.90 and 114.65
  • Above: 118.53, 1119.58, 120.40 and 121.50

OANDA’s Open Positions Ratio

USD/JPY ratio is showing slight movement towards long positions, consistent with USD/JPY continuing to drop, resulting in more short positions being covered. Long positions have a solid majority (70%), which is indicative of strong trader bias towards the pair reversing directions and moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.