Early in the American session, USD/JPY is trading around 142.77, below the 8/8 Murray, and above the 21 SMA. The yen reached a high of 143.88, now trading below this level and showing signs of a correction towards the level of 7/8 Murray (142.18).
The NonFarm Payroll data will be published in the next few hours. The report is likely to trigger a strong upward movement in the US dollar. If the figure is above the consensus of 205K, USD/JPY could continue its rise to reach 143.75 (8/8 Murray) and could even reach the psychological level of 145.00 in the next few days.
In case the report logs weaker-than-expected employment growth, we could see a downward acceleration in the currency pair. This means that the yen would strengthen towards the 21 SMA level located at 140.77. If this scenario occurs, this level could serve as good support to resume buy orders and would be seen as an opportunity to buy with targets at 142.18 and 143.75.
The daily chart of USD/JPY shows that it has potential combined with the gap it left on July 5 at around 144.65. It could be the target for the dollar bulls, so USD/JPY could reach this level in the next few days.
In the short term, as long as USD/JPY trades above the psychological level of 140.00, there is a chance that the uptrend will continue. On the contrary, in case USD/JPY falls below 6/8 Murray located at 140.62, the bearish cycle could resume and the instrument could reach 5/8 Murray at 139.06. It could even reach the 200 EMA located at 137.14.
Our trading plan for the next few hours is to sell below 143.75 with targets at 142.18 and 140.62 (6/8 Murray). In case there is a pullback towards 143.75, it will be seen as an opportunity to sell.
