Who else is looking to trade the US Non-Farm Payrolls release on Friday?
If you are and haven’t found a forex pair to trade yet, you’ll probably love jumping on the uptrend in USD/JPY over the course of a month!
Here is the hourly chart I’m looking at:
USD/JPY for an hour Graphics by TV
May has not been a good month so far for USD/JPY as it was rejected from weekly highs of 137.75 and dropped all the way to 134.50 levels.
Will there be enough demand for the dollar now that the pair is down a bajillion pips?
The next direction of USD/JPY may depend on the US labor market reports tomorrow.
According to our website US NFP Events Trading GuideMarkets see the US economy adding a net 190,000 jobs in April while the unemployment rate rose from 3.5% to 3.6%. However, the pace of average hourly earnings increase should remain at 0.3%.
If the numbers come out better or within market expectations, US consumers will have more money to spare if not only tougher bank lending terms but also push consumer prices higher.
This will justify the Fed’s recent rate hike and its stance against rate cuts for the foreseeable future.
The possibility of further tightening may tempt the USD/JPY bulls to jump into the 134.00-134.50 support area.
As you can see, the current prices of USD/JPY are not too far away from S1 (134.00) of the standard pivot point, resistance in April, and support of the unbroken one-month trend line.
Fed’s hawkish outlook may extend USD/JPY’s upside and push it back to 135.50 Pivot Point line.
Of course, the evidence of US labor market events also indicates that there are a lot of factors that may come into play during the NFP release.
So while we will likely see a resilient US jobs market, I am not ruling out surprises to the downside and more USD losses.
A clear break below trend line support for USD/JPY will open the opportunity to target areas of interest like 133.30 or 132.75.
Make sure to tick Average fluctuations for USD/JPY And to define your trading plan before you place any trading orders!
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