The USD/JPY currency pair on Friday plunged to trade at about 132.042 following the latest round of US data. The currency pair appears to have completed a downward breakout from an ascending channel formation in the 60-min chart.
The pair has now plummeted to trade closer to the 100-hour moving average line. As a result, the currency pair has moved closer to the oversold levels of the 14-hour RSI.
USD/JPY Fundamentals Overview
From a fundamental perspective, the USD/JPY currency pair is trading at the back of a relatively busy period in both markets. On Friday, Japan’s Jibunk Bank Services PMI for December missed the expected reading of 51.7 with a reading of 51.1. Earlier in the week, the labour cash earnings for November outshone the (YoY) estimate of 1.5% with a change of 0.5%, while the consumer confidence index for December beat the expectation of 29.1 with a reading of 30.3.
In the US, the non-farm payroll data for December outshone the expectation of 200k with a job count of 223k. The unemployment rate also came in better than expected at 3.5%, down from 3.6%, beating the estimate of 3.7%, while the average hourly earnings for the month grew by 4.6%, missing the consensus estimate of 5%. The ISM Services PMIs for December fell below forecasts on all verticals.
USD/JPY Technical Analysis (the 60-min Chart)
Technically, the USD/JPY currency pair appears to have recently completed a downward breakout from an ascending channel formation. This indicates an abrupt change in the market sentiment from bullish to bearish.
Therefore, the bears will be targeting extended declines at about 131.279 or lower at 130.347. On the other hand, the bulls will look to pounce on rebounds at about 132.968 or higher at 133.812.
USD/JPY Technical Analysis (the Daily Chart)
In the daily chart, the USD/JPY currency pair appears to be trading within a descending channel formation. This indicates a significant long-term bearish bias in the market sentiment.
Therefore, the bears will be looking to extend the current streak of declines toward 129.714 or lower to 126.685. On the other hand, the bills will be targeting potential reversal profits at about 134.864 or higher at 137.793.