Overview:
USD/JPY is consolidating with risks skewed lower as markets await 1,330 GMT U.S. December nonfarm payrolls (expected to have increased by 200,000) and unemployment rate (expected to stay unchanged at 7%). A very strong jobs report would raise worries that the Federal Reserve could wind down its bond buying at a faster pace and start raising short-term interest rates sooner than many expected. USD/JPY is undermined by weaker dollar sentiment (ICE USD index last 80.93 versus 81.07 early Thursday), lower U.S. Treasury yields, Japan exporter sales. But dollar sentiment is soothed by bigger-than-expected 15,000 drop in U.S. jobless claims to 330,000 in the week ended Jan. 4 (versus 335,000 forecast). USD/JPY losses are also tempered by demand from Japan importers; ultra-loose Bank of Japan's monetary policy; positions adjustment before weekend. Yen crosses are vulnerable to China December trade balance data.В
Data focus:
1345 GMT Fed's Lacker speaks
1500 GMT U.S. November monthly wholesale trade, January IBD/TIPP economic optimism index
1805 GMT Fed's Bullard speech.
Technical comment:
Daily chart is mixed as MACD is bullish, but stochastics is neutral.В
Trading recommendation:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As far as the price is above its pivot point, a long position is recommended with the first target at 105.1 and the second target at 105.4 in mind. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 104.2.The breach of this target will move the pair further downwards and one may expect the second target at 104. The pivot point stands at 104.6.
Resistance levels:
105.1
105.4
105.85
Support levels:
104.2
104
103.8
