USD/JPY Retreats Following Weak Non-Farm Payrolls

USD/JPY (daily chart as of January 10, 2014) tumbled from around 105.30 today after a sharp drop on November non-farm payroll data, with a postponed further tapering anticipation. As of this writing, the currency pair temporarily holds the medium-term support line at 103.70, which was the high of May 22, 2013.

The currency pair has been trading well above the daily EMA 20 (bold green moving average line on chart) since the breakout above the large trading range (bold blue converging lines) on November 8, indicating a directional move after the break. Today price for the first time traded down through the EMA 20, which shows weakening upside momentum.

As long as price can hold the daily EMA 20 and the key support at 103.70, recent directional movement could continue with a potential target at the monthly EMA 200 that has been serving as major resistance since 1998. However, if price is unable to stay above the daily EMA 20 and the 103.70 mark, more consolidation should be expected ahead.

Support levels below:

1st support: daily EMA 20 and 103.70

2nd support: 102.50 (December 17 low)
3rd support: 101.60 (December 6 low)

Resistance levels above:
1st resistance: 105.40 (January 2 high)
2nd resistance: monthly EMA 200
3rd resistance: 110.65 (August 1, 2008 high)