Yen extends advance and pressures key support ahead of US jobs report
The pair falls further in early Friday’s trading and pressuring key short-term support at 106.78 (25 June low) following 1.31% fall on Thursday (the biggest one-day loss since 17 May 2017).
Message from President Trump that the US would impose additional 10% tariff on $300B worth Chinese goods, shook markets and sparked strong demand for safe-haven yen.
Positive impact on dollar from hawkish Fed was short-lived and near-term focus turned lower.
Bears threaten break of 106.78 and 106.43 (Fibo 76.4% of 104.59/112.40) pivots that would open way towards 2019 low at 104.59 (3 Jan).
Daily techs turned to full bearish mode as falling thick daily cloud and Thursday’s massive bearish candle weigh.
US jobs report is due later today and is the key event of the day.
NFP are expected to rise by 164K in July vs 224K previous month, earnings remain solid and unemployment at multi-year low that confirms that US economy is in good shape.
Labor report will be a good signal for the Fed, whether to stay on hold with rate cuts (in case labor report is strong) or to think about further easing in coming months (if figures fall below expectations).
Selling upticks under daily cloud base remains favored near-term scenario, with strong bearish signal expected on firm break below 106.78/43.
Alternatively, violation of pivotal barriers at 108.07/19 (daily cloud base / converged 10/20DMA’s) would sideline bears and shift near-term focus higher.
Res: 107.21; 107.56; 107.71; 108.01
Sup: 106.78; 106.43; 105.91; 105.60