The pair has recently made a strong upside breakout from the USDJPY forex descending triangle on a longer-term time frame. From there, price has made a strong rally past 102.00 then formed a bullish flag pattern, indicating that there could be buying pressure left.
Stochastic is moving lower and if it reaches the oversold zone, another rally might take place. Going long above the 103.00 mark and aiming for a hundred pips with a tight stop could yield a high return-on-risk. Take note that the mast or earlier move is approximately 100 pips in height.
The US non-farm payrolls report is up for release today and a stronger than expected reading might lead to more gains for this pair. Bear in mind that the FOMC already acknowledged the recent improvements in the labor sector and another strong NFP report might convince policymakers that it’s about time to move closer to tightening monetary policy.
USDJPY Forex Outlook
The NFP figure is expected to show 231K in hiring gains, weaker compared to the previous month’s 288K increase. Still, the jobless rate is slated to hold steady at 6.1% for July. A higher than expected reading could lead to more dollar gains while a weaker than expected result could force the currency to return some of its recent wins.
The trend in the initial jobless claims has been positive for the labor market, as the 4-week average has reached its lowest since 2006. However, manufacturing surveys have hinted that hiring probably slowed down in July.
The latest FOMC statement appeared to be dovish as the Fed declined to give any clear clues on when it might start tightening. It did note though that employment and inflation have shown improvements, although some risks remain. The US GDP report came in stronger than expected at 4.0% in Q2 2014.
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