Home Forex News USD/JPY Rallies TO 3-Week Highs ON Weak Japan’s Data

USD/JPY Rallies TO 3-Week Highs ON Weak Japan’s Data

25
0
  • Shrinking Japan’s Industrial Activity
  • Rising Unemployment levels
  • FED Concerns

The Japanese Yen weakened against the U.S Dollar as downbeat industrial and employment data exacerbated concerns about Japan’s economy. USD/JPY pair raced to three-week highs as traders reacted to the worse than expected economic data.

Yen Weakness

The USD/JPY has since broken out of a tight trading range, having closed above the ¥107.50 resistance level. The pair is seen edging higher as traders continue to bet on the U.S dollar as a safe-haven amidst growing concerns about economic recovery not only in Japan but worldwide.

Time                            : 06-30-2020

Pivot                           : 107.58

Technical View           : Long Above 107.78

Target                         : 107.98 next 2 targets are 108.24 and 108.47

Comments                  : Bullish

Last Price                    : 107.78

The immediate data point putting pressure on Yen sentiments in the currency market is confirmation that industrial production fell 8.4% in May. That was a larger decline than the expected median drop of 5.6%. However, it was a slight improvement considering a 9.8% contraction in April.

A spike in the jobless rate to 2.9% in May is another development that continues to pile pressure on the Yen against the Greenback. The unemployment rate continues to tick higher, considering it read 2.6% in April. The surge can be attributed to, among other things, the lockdowns imposed to curb the spread of the deadly coronavirus outbreak.

The Jobs to applicant’s ratio has since dropped to 1.20 from 1.32 in April, alluding to the ongoing contraction in Japan’s economy. On the other hand, the U.S dollar strengthened against other major currencies as traders bet on it as a safe haven.

FED Chair Warning

Federal Reserve Chairman, Jerome Powell, has already indicated that the U.S economy is also facing its fair share of challenges in the wake of coronavirus disruptions. Output and employment levels remain below pre-pandemic levels. The U.S economy is unlikely to recover until people are safe about returning to work.

Improving economic data also continues to offer support to the U.S dollar with Pending Home sales spiking by 44.3% in May, beating expectations of a 15% rise. Looking ahead, traders await the release of CB Consumer Confidence for June as well as scheduled speeches by FED Speakers. However, the focus will be on FED Chair Powell Testimony later in the day.

LEAVE A REPLY

Please enter your comment!
Please enter your name here