USD/JPY plummets below 110 on disappointing US employment report

The USD/JPY pair came under pressure in the early NA session after the critical macrıo data from the U.S. failed to meet the market expectations. With the initial reaction, the pair quickly lost 50 pips and dropped to its fresh session low at 109.55. As of writing, the pair was trading at 109.85, losing 0.12% on the day.

According to the data released by the U.S. Bureau of Labor Statistics, total nonfarm payroll increased by 156,000 in August after rising by 189,000 in July (revised from 209,000), missing the market estimate of 180,000. Moreover, average hourly earnings for all employees, rose by only 3 cents, or 0.1%, in August, suggesting that the wage inflation is struggling to pick up. Following the data, the US Dollar Index fell sharply to 92.06 before recovering to 92.45, where it's still losing 0.15%.

• US: Total nonfarm payroll employment increased by 156,000 in August

Later in the session, Markit and ISM will release their manufacturing PMI data followed by the University of Michigan Consumer Sentiment Index for August.

Technical outlook

110.00 (psychological level) aligns as the first technical resistance 110.85 (Aug. 15 high/50-DMA)) and 111.80 (200-DMA). On the flip side, supports could be seen at 109.55 (20-DMA), 109 (psychological level) and 108.25 (Aug. 29 low). Despite that quick drop, the RSI on the H4 graph is still above the 50 handle, suggesting that the pair could have a difficult time extending its losses. 

• USD/JPY fade the rallies – TDS