USD/JPY and 146 in the hands of US Nonfarm Payrolls and Fed Chatter

It is a busy start to the Asian session for the USD/JPY pair, with household spending figures from Japan in focus.

In August, spending fell by 1.7%, following a 1.4% decline in July. Economists forecast a 0.2% increase. Year-over-year, spending was up 5.1% versus 3.4% in July. Economists forecast a 6.7% increase.

According to the Statistic Bureau,

• Spending on furniture & household utensils was down 10.8%, with spending on fuel, light, & water charges (-3.1%) and housing (-2.5%) also in decline.
• However, spending on culture & recreation was up 20.6%, with spending on medical care (+15.1%) and transportation & communication (+11.6%) also seeing solid increases.

Later this morning, private sector PMI numbers from China will also provide direction ahead of the all-important US nonfarm payrolls.

FOMC member chatter will also influence, with the hawks still firmly in control.

USD/JPY Price Action

This morning, the Dollar/Yen was down 0.05% to 145.050. A mixed start to the day saw the Dollar/Yen rise to an early high of 145.139 before falling to a low of 144.906.

Technical Indicators

The Dollar/Yen needs to avoid the 144.883 pivot to target the First Major Resistance Level (R1) at 145.382. However, US nonfarm payrolls will have to impress to support a breakout from the morning high of 145.139. The markets will also need to monitor FOMC member chatter throughout the day.

In the case of a breakout session, the Dollar/Yen would likely test the Second Major Resistance Level (R2) at 145.638 and resistance at 146.00 before any pullback. The Third Major Resistance Level (R3) sits at 146.393.

A fall through the pivot would bring the First Major Support Level (S1) at 144.627 into play. However, barring a dollar meltdown, the Dollar/Yen would likely avoid sub-144. The Second Major Support Level (S2) at 144.128 should limit the downside.

The Third Major Support Level (S3) sits at 143.373.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The Dollar/Yen sits above the 50-day EMA, currently at 144.433. The 50-day EMA widened from the 100-day EMA, with the 100-day EMA pulling away from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA (144.433) would support a breakout from the morning high of 145.139 to target R1 (145.382). However, a fall through S1 (144.627) and the 50-day EMA (144.433) would give the bears a run at S2 (144.128) and the 100-day EMA (143.783). The 200-day EMA sits at 142.128.