Dollar/Yen: Extended Downside, But for How Long?

The extended downside in Dollar/Yen has traders asking: Will strong U.S. jobs data reverse the trend? Key levels are in focus as we approach a critical week.

Dollar/Yen has experienced a significant sell-off, pushing the pair to levels that are increasingly capturing market attention. This extended downside has been driven by a combination of factors, including shifts in market sentiment and expectations around U.S. monetary policy. However, with the U.S. labor data set to be released this week, including the pivotal non-farm payrolls, there’s a growing sense that this downtrend could be nearing its end.

Jerome Powell’s recent remarks suggest that while the Fed is cautious, the U.S. economy remains resilient, particularly in the labor market. If the jobs data confirms this strength, we could see a sharp reversal in Dollar/Yen. The pair has been heavily sold off, but strong labor numbers could trigger a technical bounce, potentially pushing Dollar/Yen back towards the 150 level or even higher.

Technically, the pair is at a critical juncture. If U.S. data surprises to the upside, it could validate a short/medium term recovery towards key resistance levels. Traders should be prepared for volatility, as a stronger-than-expected jobs report could quickly shift the market’s focus from selling to buying. This could present a prime opportunity for those looking to capitalize on a potential short term reversal.

Keep a close watch on Dollar/Yen this week – it could be set for a significant move, with the U.S. labor market holding the key to a potential upside shift.