The US Dollar (USD) continued sliding down against the Japanese Yen (JPY) on Thursday, dragging the price of USDJPY to less than 100.50 following the release of some key economic news. The pair is, however, poised for a bullish reversal as bulls are gaining strength. The technical bias remains bearish because of a Lower High in the recent upside rally.
As of this writing, the pair is being traded near 100.25. A support can be seen around 100.00, a major psychological level ahead of 99.54, the low of the recent downside move and then 99.00, the swing low of the latest major downside wave as demonstrated in the given below chart. A break and daily closing below the 99.00 support area could incite a renewed selling pressure, validating a dip towards the 95.00 in the long run.
On the upside, the pair is likely to face a hurdle near 101.20, the horizontal resistance area ahead of 103.57, another major horizontal resistance area and then 105.00, the psychological number. The technical bias will remain bearish as long as the 107.48 resistance area is intact.
The number of Americans filing for unemployment benefits fell more than expected last week, reinforcing views of labor market strength that could encourage the Federal Reserve to raise interest rates soon.
Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 262,000 for the week ended Aug. 13, the Labor Department said on Thursday. Claims for the prior week were unrevised.
Economists polled by Reuters had forecast initial claims slipping to 265,000 in the latest week.
Claims have now been below 300,000, a threshold associated with a strong labor market, for 76 straight weeks. That is the longest stretch since 1973, when the labor market was much smaller.
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy if we get a valid bullish reversal candle.