The USD/JPY pair experienced a significant decline following the release of disappointing US jobs data in July. The Nonfarm Payrolls (NFP) figure fell well below expectations, coming in at 114K compared to the forecast of 176K. Additionally, the June NFP number was revised down to 179K from the initial 206K.
As a result of the weaker-than-expected labor data, the outlook for the pair turned negative. This was further exacerbated by the unexpected rise in unemployment to 4.3% in July from 4.1% in June, as well as a slight decrease in average earnings. These factors, along with dovish signals from the Federal Reserve, have increased expectations for a 50 basis point cut in September, up from the initial 25 basis points, and have raised projections for cuts in 2024 to 110 basis points.
Following the release of the NFP data, the USD/JPY pair continued to decline, breaking below the key 150 level and the pivotal Fibonacci support at 148.54. The pair hit its lowest level since mid-March at 147.01, with a weekly close below 150 confirming a negative signal.
Bears are now targeting the immediate support level at 146.48, with a potential extension towards 145.37. However, consolidation is likely to occur as daily studies indicate oversold conditions. Any potential upward movements are expected to be capped below the 150 level, which has now reverted to a resistance level, with the 200-day moving average at 151.65 being closely watched.
Key resistance levels for the pair include 148.54, 150.00, 150.80, and 151.65, while key support levels include 147.01, 146.48, 145.89, and 145.37.
Overall, the USD/JPY pair faces continued downward pressure following the disappointing NFP data, with bearish sentiment dominating the market. Traders are advised to closely monitor key support and resistance levels for potential trading opportunities in the coming sessions.