The USDJPY currency pair has been actively declining from its 2-month high since Tuesday. Currently, the decrease has exceeded 2.5%, and prices have fallen to the monthly uptrend line. The USDJPY might find support there and at least partially compensate for the drop of recent days. Everything will depend on today’s U.S. economic statistics.
Traditionally, on the first Friday of each month, the Labor Department publishes a report, which is as significant for financial markets as the Fed meetings and inflation statistics. In fact, the labor market state is almost the last reason why the U.S. financial regulator still gives no signals about a possible monetary policy easing.
Market participants expect April’s labor market statistics to show 180,000 new jobs and a slight increase in the unemployment rate from 3.5% to 3.6%. If the actual data match these numbers or suddenly turn out to be worse than expected, the dollar might continue its decline. However, preliminary statistics presented earlier this week do not indicate a significant weakening of the U.S. labor market.
The U.S. Automatic Data Processing (ADP) demonstrated a 296,000 increase in private-sector employment compared to expectations of 148,000 and a March gain of 142,000. After the Fed meeting on Wednesday Chairman Jerome Powell said that the labor market remains highly tight and labor demand still substantially exceeds supply. If his words get confirmation from today’s statistics, the USDJPY could quickly return to an uptrend.
After 3 days of massive sell-offs, USDJPY buyers have a chance to seize the initiative. A rather strong rebound might be organized from the uptrend line, and the first growth target will be the level of 134.8. The growth scenario will be canceled at consolidating below 133.7.
The following trading strategy may be offered:
Buy USDJPY in the range of 134–134.2. Take profit – 134.8. Stop loss – 133.7.
Traders may also use the Trailing stop instead of the fixed Stop loss at their discretion.
This content is for informational purposes only and is not intended to be investing advice.
