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USD/JPY is consolidating in a triangle pattern in the shorter time frames!

Does this mean we’ll see explosive moves during the U.S. non-farm payrolls (NFP) release?

Before moving on, ICYMI, yesterday’s watchlist looked at GBP/USD’s short-term uptrend ahead of closely-watched U.S. data releases. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Upcoming Potential Catalysts on the Forex Economic Calendar:

U.S. ISM services PMI falls to 62.0 in December vs. 66.9 expected

U.S. weekly initial jobless claims up by 7K to 207K vs 197K expected

U.S. factory orders up by 1.6% in Nov vs. 1.2% gain in Oct

Canada’s trade surplus surged from 2.26B CAD to 3.13B CAD in Nov, the largest since 2008

Japan real wages fall for 3rd month (-1.6% in Nov) as inflation hits stagnant nominal pay

Japan’s household spending down by 1.3% from a year ago in Nov

Japan declares “quasi-emergency” in Hiroshima, Yamaguchi, and Okinawa prefectures

Germany’s industrial output unexpectedly dips by 0.2% in Nov after a 2.4% uptick in Oct

Germany’s trade surplus narrows down from 12.4B EUR to 10.9B EUR in Oct

BOE survey: British companies are planning to boost prices by 5% in the next year

Halifax: U.K. house prices grew by an annualized 9.8% in Dec – the fastest since July 2007 – but expected to “slow considerably” this year

France’s industrial production slips by 0.4% in Nov after a 0.9% rise in Oct

Upcoming Potential Catalysts on the Forex Economic Calendar:

U.K.’s construction PMI at 9:30 am GMT
Eurozone’s retail sales at 10:00 am GMT
U.S. non-farm payrolls at 1:30 pm GMT
U.S. unemployment and average hourly earnings at 1:30 pm GMT
Canada’s labor market numbers at 1:30 pm GMT
Canada’s IVEY PMI report at 3:00 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: USD/JPY

USD/JPY 1-hour Forex Chart
USD/JPY 1-hour Forex Chart

It’s NFP day, errbody!

All eyes will be on the U.S. dollar, which saw a strong start to the week before traders took a chill pill and remembered that, hey, “we already knew about the Fed’s plans to taper its pandemic responses and then maybe raise its interest rates!”

Based on leading indicators like the ADP report, weekly jobless claims, and the employment component of the ISM manufacturing PMI, we’ll likely see more job creation in December.

Question is, will today’s release be enough to extend USD/JPY’s uptrend?

The pair has been on a roll since late December but has paused its uptrend below the 116.00 zone where it’s trading inside a descending triangle.

Will we see a downside breakout today? Or are we looking at a bullish pennant in the making? Remember that triangles are indecision patterns. That means they can break in either direction!

Much stronger-than-expected NFP numbers would support the Fed’s aggressive tapering/tightening schedule. USD/JPY could find support from its current levels and hit previous highs near 118.00 and 118.50.

If we see a buy-the-rumor, sell-the-dollar situation, though, then USD/JPY could break below the 100 and 200 SMAs on the 1-hour time frame and drop to 115.00 or 114.50 before dollar traders take a breather and find a new direction.