Breakdown of the latest developments on the global exchanges
Dec 3, 2021, 2:50 PM GMT

U.S. Unemployment Rate at its Lowest Level in Nearly Two Years, USDJPY Bounces

U.S. Unemployment Rate at its Lowest Level in Nearly Two Years, USDJPY Bounces

The greenback jumped today following the release of the better-than-expected unemployment rate data, though it remains to be seen whether this would be enough to offset the growing bearish sentiment. You can read more about it from our comprehensive analysis of the EURUSD pair from yesterday.

The U.S. Bureau of Labour Statistics (BLS) just posted the November non-farm payrolls. According to the report's findings, the unemployment rate shrunk to 4.2 per cent, the lowest level since February 2020. This performance surpassed the preliminary forecasts, measuring a 0.4 per cent drop from a month prior.

U.S. MoM Unemployment Rate

The news bolstered the greenback, despite some initial volatility outbursts immediately following the release of the unemployment data. As can be seen on the 2H chart below, the USDJPY is currently attempting a bullish reversal.

This is elucidated by the formation of a Pennant pattern just above the 38.2 per cent Fibonacci retracement level at 113.081. Moreover, the market's reaction to the news appears to be taking the structure of a Hammer Candle, which corroborates these expectations.

Notice that the Hammer develops above the major support level at 113.250, underpinned by the 50-day MA (in green), and is currently attempting a breakout above the Pennant's upper limit.

This could be followed by an upswing to the 23.6 per cent Fibonacci at 114.015. Presently, there is a convergence of moving averages there, notably, the 100-day MA (in blue), the 200-day MA (in orange) and the 300-day MA (in purple).

USDJPY 2H Price Chart

Massively disappointing payrolls

Despite the better-than-expected unemployment rate data, BLS' report also revealed a substantial crunch in non-farm payrolls. This revelation comes just days after the robust ADP numbers for the same period.

The U.S. labour market added 210 thousand jobs in November, way below the market forecasts of 553 thousand and the 546 thousand that were recorded in October.

U.S. MoM Non-Farm Payrolls