USD/JPY had a pretty solid run this past week after breaking consolidation. But is a pullback coming with the latest U.S. jobs update coming soon?
USD/JPY Uptrend Pullback Ahead?
After a tight consolidation period in the front half of March, USD/JPY broke above the resistance at 109.25 and nearly touching the 111.00 major psychological handle in today’s session.
But the rally seems to be losing steam, possibly on some profit taking starting to take place ahead of the latest U.S. employment update from the government on Friday (Event Preview: U.S. NFP Report (March)). We just got a stellar employment update from today’s ADP private payrolls report, posting the biggest jobs gains in six months, so it’s likely an anticipated improvement in the government’s U.S. jobs update is likely priced in.
With U.S. data improving (which raises the probability of monetary policy tightening sooner than expected), it makes sense to stay bullish on the Greenback, especially against the safe haven major currencies.
But after a strong run higher in the past week, we’re standing on the sidelines on USD/JPY, waiting for a pullback, which could get as low as the 109.50 area before it makes sense for the bulls to jump back in (50% retracement, one weekly ATR from today’s highs).
If the pair pulls back and we get better-than-expected U.S. jobs data (and the covid outlook improves), then we’ll watch out for bullish reversal patterns around 109.50 – 110.00 before considering a long strategy on USD/JPY.
What do you guys think? Are you looking to get into the USD/JPY uptrend? Do you think the pair will continue to pullback or will it be a shallow one before buyers step in?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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