The dollar once again fell against the euro and the pound even though the monthly jobs report surprised to the upside and the probability of a June rate hike rise to 100%. Even commodity currencies managed to rebound against the U.S. dollar, as crude and base metals bounced back on profit-taking after sharp drops and ahead of the weekend. The only dollar pair that reacted how one would have expected was the U.S dollar/Japanese yen (USD/JPY) currency pair.
The USD/JPY has climbed back towards the top of its well established bearish channel. While the USD/JPY break out of its channel now or will it turn lower again? Well, price action appears to be bullish overall as evidenced by the sustained break above key resistances at 111.70 and 112.20. The short-term bias remains bullish for as long as 111.70 holds as support. As such we may see a bullish breakout towards 113.60 resistance next and potentially 115.20/50 thereafter.
However, in the event of a breakdown below the 111.70 support, we could see a drop back towards the 200-day moving average at 109.20, or the bottom of the channel again.