- USD/JPY extends Friday's gains, led by upbeat data which cemented a Fed June hike.
- Data released on Friday showed NFP beat expectations at 223k, with the unemployment rate down a tenth to 3.8%. Wage growth was also better than expected, up 2.7% y/y or 0.3% m/m.
- Meanwhile, the ISM came in stronger than expected at 58.7 (last: 57.3), the details were also broadly positive. Notably, pricing indicators continue to climb.
- Focus on FOMC meeting this week where the divergence between the BoJ and Fed remains the key driver.
- Technically, the pair is trading with a bullish bias on the intraday charts. Bulls likely to target 200-DMA at 110.17.
- The major finds strong support at 21-EMA at 109.43. Retrace below could see weakness.
- Breakout a 200-DMA required for further upside. Scope then for test of 111.20 (major trendline).
Support levels - 109.43 (21-EMA), 109.11 (5-DMA), 109, 108.81 (38.2% Fib)
Resistance levels - 109.80 (23.6% Fib), 110, 110.17 (200-DMA), 110.48 (Feb 2 high)
Recommendation: Good to stay long on dips around 109.60/50, SL: 109.10, TP: 110/ 110.15/ 110.45
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