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05.06.2020 11:25 AM
Analysis and forecast for USD/JPY on June 5, 2020

Good day, dear traders!

This week, the dollar/yen currency pair has not yet been considered. Well, let's fill this gap and analyze the situation for USD/JPY on the last trading day of the current five-day period. Especially since, due to its specificity, this pair reacts very strongly to important macroeconomic reports from the US, which are data on the US labor market.

So, today at 13:30 (London time), it will be known about changes in employment in non-agricultural sectors of the economy, as well as changes in the unemployment rate and growth in average hourly wages.

The consequences of the COVID-19 pandemic have had a very significant impact on the world's leading economy, so the forecasts for today's reports are certainly not optimistic. It is expected that in May, the US economy will be short of 7.75 million, which is significantly less than the previous figure of minus 20.5 million. In my opinion, it is very doubtful that the situation with the creation of new jobs has improved so much over the past spring month. I think that if Nonfarm Payrolls do not meet the expectations of experts, the US dollar risks coming under even more sales pressure. As for unemployment, it is projected that its May level will be 19.4%, while the April figure was at 14.7%. In my opinion, this is a more realistic forecast, since the US faced the COVID-19 outbreak somewhat later than many European countries. And if so, the negative consequences for the United States economy may not be fully identified yet.

The forecast for wage growth is very modest, only 1%. Let me remind you that in April, the average hourly wage increased by 4.7%. And here is an interesting nuance. The fact is that wage growth directly affects inflation in the country, which determines the Fed's next steps on monetary policy, that is, the decision on rates. Recently, the rate of wage growth has been given increased attention, and this indicator often outweighed the data on unemployment and NFP. At least, that was the case before the coronavirus epidemic. What will be the reaction of market participants today, we will find out and see after 13:30 London time), but in the meantime, we will consider the USD/JPY charts. Since this currency pair has not yet been considered this month, I will start with the results of the previous one.

Monthly

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Following the results of May trading, the pair strengthened, ending the last spring month at 107.81. This is slightly above the 89 exponential moving average, but slightly below the Kijun line of the Ichimoku indicator. Here it is worth paying attention to another fact. For three months in a row, the orange 144 exponential moving average and the Tenkan red line provided very strong support for USD/JPY. Trades in all three spring months have consistently closed above these indicators.

The dollar/yen pair started the summer with rapid growth, and at the end of the review, it is trading near 109.28. The main task of the bulls for USD/JPY this month will be its closing above 50 MA, within the Ichimoku cloud, as well as above the landmark psychological and technical level of 110.00. If these conditions are met, you can expect to continue the upward dynamics in the future. In the meantime, let's see what the situation is on the lower timeframes and whether there are signals to enter the market.

Daily

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This week, the pair demonstrates excellent growth, as a result of which 50 MA, Tenkan, 144 EMA were passed and a powerful exit up from the Ichimoku cloud took place. All this happened at the trading on June 2, and then, in the following days, the upward momentum gradually began to fade. Now the pair is waiting for data on the US labor market and is trading without a clear direction. Strong resistance of sellers was noted near the level of 109.40. This mark prevents further movement of the quote in the north direction. The chart clearly shows how the pair fell to 106.00 on April 6.

Conclusion and trading recommendations for USD/JPY:

Based on the technical picture on the higher timeframes, the most likely scenario is an ascending one, which means that the pair is buying. I recommend that you take a closer look at opening long positions after corrective pullbacks in the area of 109.00-108.70. At the same time, it should be borne in mind that if the price is fixed at 109.00, questions will appear in the continuation of the ascending scenario. If today's candle is formed in the form of a reversal bearish model, on Monday you can try a neat sale with the removal of the stop for today's highs. However, I do not recommend setting large goals. Opening short positions should be considered in the calculation of a correction. The main trading idea is purchasing.

One last thing. At a time when life and economic activity in the vast majority of countries are improving, demand for protective assets is declining, and risk sentiment is increasing. This can explain the growth factor of the US dollar against the Japanese currency. After all, the yen is considered the main safe-haven currency. Don't rush and wait for nonfarm.

Have a nice weekend!

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ดาวน์โหลด MetaTrader 4 และเปิดการซื้อขายครั้งแรกของคุณ.
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