USD/JPY: Slowly but steadily heading south

USD/JPY is bearish as a critical resistance level at 106.90 should cap advances ahead of the US Nonfarm Payroll report, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“Japan released overnight Labor Cash Earnings for March, which increased by 0.1%, missing the market’s expectations. Overall Household Spending in the same period decreased by 6.0%. Also, the Jibun Bank Services PMI plunged to 21.5 in April after printing 33.8 in March.”

“The US is expected to have lost 22 million jobs in April, while the unemployment rate is foreseen at 14%.” 

“A daily descendant trend line is coming from April’s high at 109.37 stands today at around 106.90, a critical resistance that the pair needs to surpass to lose its bearish tone.”

“The 4-hour chart shows that the risk remains skewed to the downside, as the pair is unable to advance beyond a bearish 20 SMA, while the larger ones gain downward strength above it.”