USD/JPY battles previous bearish gravity; Why does the 115.00 figure matters?

NFP misses consensus, then wages save the day. That’s exactly how most analysts pictured things for dollar bulls last week. However, USD/JPY is not digesting US data as market participants expected, finding gravity in today’s European session to be heavy.

Bears slaughter Bulls from the 117.50 blind side

The Dollar Index recovery played a critical role to attract buyers from the sidelines, a must needed effort to recreate a “Trump Trade” continuation towards the consensus target from the last 3-weeks; 120.00.

Nevertheless, risk sentiment seems mixed between balanced economic conditions in a few regions and uncertainties clouding relevant locations. A perfect example, another Scottish referendum, then add May’s two-face media game and you have all the variables in place to reduce risk exposure and move resources to the Japanese yen.

USD/JPY Technical Levels

As of writing the pair is losing close to (1.10%) at 116.30, trading 150 pips lower from the 117.50 figure, a high printed during the Asian session. On the other hand, the immediate support seems around its 50 SMA (H1), a close and open below this level grants more energy to build a bearish case.

Furthermore, on the weekly chart, there is technical evidence to favor adding more short positions as Stochastic (5,3,3) is in the early stages out of the overbought condition which suggests a deeper pullback is doable. On top of this development, the 100 SMA (red color) behaves as the gatekeeper around the 115.00 handle, an important support to keep bulls hanging out.

USD/JPY analysis: upside limited by 117.40