Who else is looking to trade Friday’s U.S. NFP release?
If you are and you haven’t found a forex pair to trade yet, then maybe you’ll like jumping on USD/JPY’s month-long uptrend!
Here’s the 1-hour chart that I’m looking at:
May has NOT been a good month so far for USD/JPY because it got rejected from its 137.75 weekly highs and plummeted all the way to its 134.50 levels.
Will there be enough dollar demand now that the pair has fallen by a bajillion pips?
USD/JPY’s next direction might depend on tomorrow’s U.S. labor market reports.
According to our U.S. NFP Event Trading Guide, markets see the U.S. economy adding a net of 190K jobs in April while the unemployment rate ticks higher from 3.5% to 3.6%. The pace of average hourly earnings increase is to remain at 0.3%, however.
If the numbers come in better or within market expectations, then U.S. consumers will have more moolah to not only whether tighter bank lending conditions but also push consumer prices even higher.This will justify the Fed’s latest rate hike and its stance against a rate cut in the foreseeable future.
The prospect of further tightening could entice USD/JPY bulls to jump in at the 134.00 – 134.50 support zone.
As you can see, USD/JPY’s current prices are not too far from the S1 (134.00) of the Standard Pivot Points, a resistance in April, and a trend line support that’s been unbroken for a month.
Hawkish Fed expectations could extend USD/JPY’s uptrend and push it back up to the 135.50 Pivot Point line.
Of course, the U.S. labor market event guide also says that there are tons of factors that might come into play during the NFP release.
So, while we will more likely see a resilient U.S. jobs market, I’m also not discounting downside surprises and further USD losses.
A clear break below USD/JPY’s trend line support will open up the opportunity to target areas of interest like 133.30 or 132.75.
Be sure to mark USD/JPY’s average volatility and to have your trading plan in place before you place any trading orders!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.