Last Friday’s NFP may have spurred a dollar selloff, but can USD/JPY still find buyers at these correction levels?
In case you missed it, Uncle Sam reported a meager 187K increase in hiring for July versus the estimated 205K gain while the June figure suffered quite the downgrade.
This pair seems inclined to resume its climb, though, as the Fibonacci retracement levels might attract dollar bulls looking for a bargain.
USD/JPY 1-hour Forex Chart by TV
Price is finding support at the 38.2% Fib for now, and a bounce higher could take it back up to the swing high near the 143.50 minor psychological mark and R1 (143.49).
A larger correction could reach the 50% level near the 141.00 handle or the 61.8% Fib closer to a short-term rising trend line and S1 (140.28).
Technical indicators are looking mixed, though.
The 100 SMA is above the 200 SMA to suggest that the path of least resistance is to the upside, but Stochastic is approaching overbought levels to indicate exhaustion among buyers.
Turning lower would signal that sellers are taking over, which might keep the correction going for some time.
This could give more market players a chance to adjust their Fed rate hike expectations and dollar positions while also keeping in mind that the BOJ has been conducting unscheduled bond-buying operations recently.
With that, USD/JPY’s declines might be capped, as traders remain wary of more intervention-like moves from the Japanese central bank. Of course upcoming CPI and PPI readings from the U.S. economy might still dictate this pair’s direction later on.
What do you think? Can the pair carry on with its uptrend this week?
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