TECHNICAL INDICATORS POINT TO DOWNWARD CORRECTION OF USDJPY

The USDJPY price continued moving up following a strong non-farm payrolls publication on Friday. The NFP rate increased by 222,000 in June against the expected increase of 175,000. The growth of unemployment by 0.1% to 4.4% is explained by growth in the number of people that are searching for work.

Today additional pressure on the yen came from the statement of the head of the Bank of Japan, Haruhiko Kuroda, where he stressed the BoJ’s intention to support current ultra-stimulative monetary policy for as long as needed in order to reach the target level of inflation of 2.0%. Core machinery orders in Japan decreased by 3.6% in May compared to the forecasted expansion of 1.7%. Today the mood of traders may be influenced by data from the US on consumer credit volume at 19:00 GMT.

Currently the quotes are moving along the upper limit of the ascending channel and the next target levels in case of growth will be 114.70 and 115.35. We see divergence between the MACD signal line and the price on the 15-minute chart and that, together with RSI being close to overbought zone, point to a possible descending price correction with an immediate target near 113.00 and the lower limit of the channel.