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USD/JPY Eyes Technical Support Ahead of NFPs

USD/JPY Eyes Technical Support Ahead of NFPs

Michael Boutros,

Talking Points

  • USDJPY shorts at risk ahead of NFP
  • Updated targets & invalidation

USDJPY 30min

Chart prepared by Michael Boutros

Technical Outlook: We’ve been tracking this decline since the start of the week on SB Trade Desk and the focus is now on support at the lower median-line parallel which converges on the 50% retracement heading into tomorrow’s U.S. Non-Farm Payrolls release. Note that we’ve been marking some divergence into these lows leaving the immediate short-bias vulnerable while above 108.40/49. Interim resistance stands at 109.10 with our near-term bearish invalidation level set 109.69.

A break lower keeps the short-bias in play targeting the key 61.8% retracement at 107.79. Added caution is warranted heading into the release with the data likely to fuel increased volatility in USD crosses. From a trading standpoint, I would be looking to sell a rally towards the median-line, or on a break-and-test of support as resistance. Continue to track this setup and more throughout the week on SB Trade Desk.

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  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net long USDJPY- the ratio stands at +2.15(68% of traders are long)-bearishreading
  • Yesterday the ratio was +2.08; Long positions are 9.3% higher than yesterday and a full 22.6% above levels seen last week
  • Open interest is 8.2% higher than yesterday and 6.3% above its monthly average
  • SSI has been net long since January 29th & the recent increase in long positioning along an increase in open interest continues to affirm the broader short-bias. That said, it’s important to note that sharp spikes in SSI have often been accompanied by near-term recoveries in price before continuing lower. Heading into the release tomorrow, the risk remains for a recovery higher which could ultimately offer more favorable short-entries.

Relevant Data Releases This Week

Other Setups in Play:

Looking for more trade ideas? Review DailyFX’s Top Trading Opportunity of 2016

---Written by Michael Boutros, Currency Strategist with DailyFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.