USD/JPY Forecast: 114.00 still possible despite weak US wage growth

Omkar Godbole FXStreet Contributor

The USD/JPY pair fell from 113.59 to 113.13 on weaker-than-expected US wage growth numbers. But the decline proved to be transient as the spot found bids and moved back above 113.50 levels.

Weak wage growth is not a news anymore. There is consensus in the market that tax cuts would provide enough room for the Fed to keep pushing interest rates higher at a gradual pace. No wonder, the USD/JPY quickly regained the bid tone. The pair would explore downside only on risk aversion in the equity markets.

As of writing, the USD/JPY is at 113.53 levels.

1-hour chart

The above chart shows a bearish price RSI divergence and a potential double top reversal with neckline at 113.30.

View

Bulls need to break above 113.60 as quickly as possible in the Asian session on Monday, else the spot could drop to the neckline support at 113.30 and may breach the same if the treasury yields retreat. An hourly close below 113.30 would open up downside towards 113.00
That said, the broader outlook would still remain bullish as discussed earlier today. The doors remain open for a rally to 114.18 (bull flag breakout target as per the measured height method).
Only a close today below 111.99 (Dec. 6 low) would abort the bullish view.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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