Monetary Policy Bets Could Drive The USDJPY Currency Pair Higher.

The higher-than-expected US Jobs Report helped shift the sentiment towards a potential 25-basis point interest rate hike by the Federal Reserve, sending the US dollar higher against its major counterparts. Even though the jobs data showed a slowdown from the revised 326k jobs for February to 236k jobs added for March. The March figure was still higher than the expected 230k, and the dip in the unemployment rate to 3.5% from 3.6% also helped refuel the need for a hike rather than a pause in May.

The recent remarks by the Bank of Japan Governor Ueda Kazuo that the bank would stay true to its ultra-loose monetary policy path negatively weighed on the Japanese Yen, helping it shed some of the recent fear-driven gains. The possible monetary policy divergence could help drive the movement of the currency pair in the trading session with the greenback firmly in the driving seat.


The 4H chart shows the currency pair known as the “Gopher” is currently trading around the 50% Fibonacci retracement level following the failure to break through the resistance level at 133.827. Therefore, the trader’s reaction to the 50% Fibonacci retracement level at 133.322 is likely to determine the direction of the currency during the trading session.

 If the price action substantially moves above the 133.322 price level, then the bulls could look to retest the initial hurdles for the bulls, the resistance level at 133.827, a level of interest for the bulls. The breakthrough above the initial resistance would expose the bulls to the 61.80% Fibonacci retracement level. A breakthrough in the golden ratio could confirm an extended rally and bring the resistance level at 135.171 into play.

The bears could be looking for a sustained move below the 50% Fibonacci retracement level to push the price towards the initial support level of 132.912, a level of interest for the bears. A fall through the initial support level would bring the 50-day moving average and the support level at 131.495 into play.


Speculation could continue to drive the currency pair’s movement during the trading session due to the lack of major economic indicators from both economies. Thus, a trading opportunity could exist at the resistance level of 133.827 level and if the price action sustainably rejects the 50% Fibonacci retracement.

Sources: TradingView, Reuters,

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