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USD/JPY looks ready to bust out of its consolidation ahead of the anticipated U.S. NFP release!
Will the pair see a breakout today?
Or will market themes in the next trading sessions keep USD/JPY inside its short-term downtrend?
Before moving on, ICYMI, yesterday’s watchlist looked at USD/CHF’s descending triangle support ahead of the U.S. initial jobless claims data. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
ECB holds deposit rate at 4% as expected; sees possibility of rate cuts in June as inflation set to hit 2% target in 2025
Canada Building Permits rose by 13.5% m/m in January (3.3% m/m forecast; -11.5% m/m previous)
Canada trade balance went from a C$863M deficit in December to a C$496M surplus in January
Weekly initial jobless claims came in at 217K, inline with forecast & previous read; continuing claims were 1.906M vs. 1.898M the previous week
U.S. monthly international trade deficit increased by -$67.4B in January (-$64.5B forecast) vs. an increase of -$64.2B in December
U.S. Job Cuts for February was higher than expected at 84.6K (51K forecast; 82.3K cuts in January)
Federal Reserve Bank of Cleveland President Loretta Mester wants to see more evidence of inflation cooling but thinks rate cuts should start this year
Japan’s household spending dropped by 6.3% y/y in January, the fastest drop in 35 months, but officials pointed to decreases in new car purchases amid factory suspensions as a one-off reason for the decline
Japan’s bank lending eased from 3.1% y/y to 3.0% y/y in February
Japan’s current account surplus in January: 2.73T JPY (2.07T JPY expected, 1.81T JPY previous)
Japan’s Economy Watchers sentiment improved from 50.2 to 51.3 in February
Germany’s industrial production accelerated from -2.0% to 1.0% (0.5% expected) in January
Germany’s producer prices gained 0.2% m/m (0.1% m/m expected, -1.2% m/m previous)
Price Action News
Overlay of NZD vs. Major Currencies Chart by TradingView
As in the last U.S. NFP Fridays, the major currencies generally traded in tight ranges ahead of the anticipated report.
Commodity-related currencies like AUD and NZD saw a bit more volatility, however, despite the lack of fresh catalysts. AUD swung a bit higher, possibly in anticipation of favorable Chinese CPI and PPI reports over the weekend.
The New Zealand dollar, on the other hand, swung lower but also recouped some of its intraday losses before the start of European session trading. There were no direct catalysts for the move though some NZD traders may have taken profits ahead of the weekend.
NZD is currently trading mixed, with gains seen against EUR and GBP and losses seen against USD, CHF, JPY, AUD, and CAD.
Upcoming Potential Catalysts on the Economic Calendar:
Germany’s industrial production at 7:00 am GMT
Germany’s PPI data at 7:45 am GMT
France’s trade balance at 7:45 am GMT
Euro Area’s revised GDP and final employment change at 10:00 am GMT
Canada’s labor market data at 1:30 pm GMT
U.S. NFP reports at 1:30 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action!️
USD/JPY: 15-min
USD/JPY 15-min Forex Chart by TradingView
Who’s ready for NFP Friday???
If you’re looking for USD setups to trade, then you might want to check out USD/JPY, which is trading inside a short-term descending channel pattern in the 15-minute time frame.
In case you missed it, the anti-USD sentiment really took its toll on USD/JPY, which is also reacting to hawkish speculations around the Bank of Japan’s (BOJ) next policy moves.
The pair is currently trading just below 148.00, which is coincidentally close to the top of a descending channel as well as the 100 SMA in the 15-minute time frame.
Will the pair continue to trade inside its downtrend pattern? Or will we see an upside breakout today?
Our U.S. NFP Event Guide suggests that the markets are expecting February’s jobs figures to pull back from their strong January numbers. But the article also suggests waiting until after the NFP release to commit to a position.
If the numbers do come in weaker than January’s figures, then USD/JPY may extend its short-term downtrend. A move to the 147.50 previous lows may be on the table but USD/JPY could also dip to the 147.25 zone near the S1 Pivot Point line if there’s enough bearish momentum for the dollar.
In the event that today’s U.S. NFP report encourages USD-buying, USD/JPY could bust above its consolidation. USD bulls may look at the 148.25 inflection point or 148.50 minor psychological handle as potential targets in this case.
Whichever bias you choose to trade, make sure to consider USD/JPY’s average daily volatility when executing your trading plans!
