Fundamental Analysis
The US Dollar failed to close stronger despite employment figures rose than expected by 211 000 jobs. In addition the unemployment rate fell to the lowest since 2007 to 4.4% but wages growth remained soft with a 0.3% monthly gain.
The Consumer Price Index (CPI) figures will be released on Friday 12 May at 830 EDT with an expected 0.2% expansion after a 0.3% contraction last month. The US Fed will be monitoring the inflation figures ahead of rate hike possibility in June.
The US Retail Sales figures are expected to post some gains after flat figures were posted last month. Core retail sales are expected to rise by 0.5% and 0.6% for the retail sales figures.
Technical Analysis
Weekly Chart Analysis
USDJPY Weekly Chart
On the USDJPY weekly chart, there is a short term down trend as the price made lower peaks and lower troughs according to Dow Theory. However, the price was above the Kumo Cloud as seen on the weekly chart above reflecting an uptrend. The price found support on the Senkou Span B in February but managed to pierce through Senkou Span B in March. The pair found Support at 108 range and pierced through the Kijun Sen to the up side and the Senkou Span B and Tenkan Sen. This reflects a bullish signal on the weekly chart. However, the Chikou Span is below the cloud showing that the weekly bullish signal is weak.
Daily Chart Analysis
The pair moves into the Ichimoku Cloud.
USDJPY Daily Chart
There is a clear down trend on the daily chart with a series of lower peaks and lower troughs according to Dow theory and the price traded below the kumo cloud until the pair rose to the kumo. The price broke the Senkou Span A on 3 May and retraced upon reaching Senkou Span B. The week closed inside the kumo cloud on the daily chart providing a neutral signal. The Tenkan Sen crossed the Kijun Sen to the up side highlighting a bullish indication but a week signal as it occurred below the Kumo cloud. The down trend line is yet to be confirmed waiting for a third peak.
The last candlestick is a bullish one with a long lower shadow highlighting rejection of the Senkou Span A support at 112.082. The bears took control the beginning of the trading session following a bearish Thursday but lost control and bulls were committed at the end of the trading session on Friday.
Ichimoku Trading Strategy
Bullish Signal when price action breaks through the Kumo cloud to the upside (breaks through Senkou Span B). Further confirmation is given by breaking of the tentative trendline and a break of the resistance level around 113 range.
Bearish Signal - If the resistance around 113 range held strong, bearish signal is triggered at the break of the Senkou Span A.
Conclusion
I am bullish on USDJPY as the bearish move was rejected when the price touched Senkou Span A and the price exploded to the bullish side on the daily chart. The weekly chart provided a bullish signal upon price action broke through Senkou Span B and Tenkan Sen. The Kumo Cloud on the right side of the weekly chart suggest a bullish long term indication. The market is anticipating a Fed rate hike in June and the US bonds yields ahve began to rise in anticipation of the tightening. The French election result will cause some volatility on the markets.
