USD/JPY pulls back sharply from six-year high

<p>USD/JPY (daily chart shown below) has pulled back sharply this week after having reached a six-year high slightly above the 110.00 handle at the beginning […]</p>

USD/JPY (daily chart shown below) has pulled back sharply this week after having reached a six-year high slightly above the 110.00 handle at the beginning of the month.

Last Friday’s better-than-expected US non-farm payrolls and unemployment data briefly lifted the currency pair to approach the noted long-term high, but dollar strength quickly eroded over the course of this week. Wednesday’s FOMC minutes coming from the Fed further weakened the dollar against most major currencies.

2014-10-09-USDJPY

The pullback for USD/JPY so far represents around a 2% decline from the highs, as the currency pair has dipped below the 108.00 support level as of Thursday.

Prior to the current dip, the dramatic rise since July has been swift and steep, hitting progressively higher upside price targets. Now that the multi-year extreme around 110.00 has been firmly established, a correction could be substantial.

Any further downside momentum on a continued pullback should target support levels at 107.00 and then the 105.50 area, which was the last major high hit in the beginning of the year.

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