USD/JPY Forecast: Stronger Upside Momentum Required for Sustained Bullishness
The USDJPY keeps a positive tone for the third consecutive day, as improved sentiment and solid US jobs data underpin the dollar.
Fresh extension in early Monday penetrated thick daily Ichimoku cloud (cloud base lays at 132.15) and cracked pivotal Fibo resistance at 132.79 (38.2% of 137.90/129.64).
Holding above the cloud base (reinforced by daily Tenkan-sen) is seen as a minimum requirement to keep bulls in play, with extension and close above the 132.79 barriers, to open the way for further recovery.
Key barriers lay at 133.75/77 (Apr 3 high / 50% retracement of 137.90/129.64 / daily Kijun-sen) and 134.08 (daily cloud top), with a sustained break here to generate a strong bullish signal (also on completion of bullish failure swing) and expose targets at 134.75/135.11 (Fibo 61.8%/mid-Mar lower platform).
Caution on the dip and close below the daily cloud base (as bullish momentum is fading on the daily chart and sends warning signals) which would signal a recovery stall and the possible end of a three-day recovery.
Res: 132.80; 133.16; 133.77; 134.08.
Sup: 132.15; 131.59; 131.00; 130.62.
EUR/USD Outlook: Euro Faces Uphill Battle in Quest for Stronger Foothold
– EUR/USD has extended its sideways grind near 1.0900.
– Near-term technical outlook fails to provide a direction clue.
– Markets will pay close attention to US yields in the absence of high-tier data releases.
EUR/USD has extended its sideways action early Monday after having registered small losses on Friday. Thin trading conditions on Easter Monday are likely to make it difficult for the pair to gather directional momentum.
On Friday, the data from the US revealed that Nonfarm Payrolls rose by 236,000 in March, slightly below the market forecast of 240,000. In the same period, the Unemployment Rate declined to 3.5% from 3.6% with the Labor Force Participation rate improving to 62.6% from 62.5%. Finally, Average Hourly Earnings increased by 4.2% on a yearly basis, down from the 4.6% recorded in February.
Although the jobs report pointed to softening conditions in the labor market, payroll growth remained relatively healthy. In turn, the benchmark 10-year US Treasury bond yield staged a strong rebound and gained 3% in the shortened session ahead of the weekend, helping the US Dollar (USD) hold its ground.
Early Monday, the 10-year US yield is down more than 1% and an extended downward correction in the American session could help EUR/USD keep its footing and vice versa.
Meanwhile, the US stock index futures trade mixed. In the absence of high-tier macroeconomic data releases, a bearish action in Wall Street’s main indexes after the opening bell could support the USD and weigh on EUR/USD.
Ahead of the March inflation data from the US, however, market participants are likely to refrain from making large bets.
EUR/USD Technical Analysis
EUR/USD trades slightly below 1.0920, where the lower limit of the ascending regression channel and the 20-period Simple Moving Average (SMA) on the four-hour chart meet. On the other hand, the 50-period SMA remains intact as support at around 1.0900. Finally, the Relative Strength Index (RSI) indicator fluctuates near 50, reflecting the pair’s indecisiveness.
With a four-hour close below 1.0900, additional losses toward 1.0860 (Fibonacci 23.6% retracement of the latest uptrend) and 1.0840 (100-period SMA) could be witnessed.
In case EUR/USD stabilizes above 1.0920, it could stretch higher toward 1.0950 (static level) and 1.0975 (April 4 high).