Having seen a pullback to the 50D Moving Average we could argue that previous carry trades have already been cleared for USDJPY with prospects of a change in the rate differentials nil for the near future. With hourly earnings up 0.4% from 0.2% previously and the May Non-farm Payrolls hugely surprising on the upside to read 272,000 against a 182,000 consensus prospects of a Fed rate cut is now further removed. This makes reinstating carry trades an attractive proposition, with an upside in rates and the potential to push past 157.733.
Resistance
- 158.451 – Intraday Highs
- 157.733 – May High
- 157.074 – Friday High
Support
- 156.416 – Intraday HIgh / Low
- 155.924 – Intraday High
- 155.118 – Friday Low
Thanks to strong US jobs data we have USDJPY clearly bouncing of the 50D Moving Average and closing the week with a bullish engulfing break out. Looking at the stochastic we have the daily charts pointing up towards the overbought marker though intraday we are already above 80 in 4H charts. Pattern wise we have a flag in intraday charts and a triangle for the daily range plays from the past two months. Bias for now calls for further gains immediate objective will be to test the 157.733 highs from May. Look for a break of Friday’s highs with engulfing candles as an excuse to go long, or long tails off 156.416 in the hourly level.
