USD/JPY and sub-130 in the Hands of the US Jobs Report

It was a quiet morning for the USD/JPY. Household spending figures from Japan drew interest.

Household spending slid by 2.4% in February versus a forecasted 0.4% decline. In January, household spending jumped by 2.7%. Year-over-year, spending increased by 1.6% versus 0.3% in January. Economists forecast a 4.3% rise.

According to the Statistics Bureau,

• Spending on housing fell by 12.1% year-over-year, with spending on education down by 9.6%.
• Household spending on furniture & household utensils fell by 9.1%, while spending on culture & recreation was up 18.6%.

While the household spending numbers drew interest, rising geopolitical tensions between the US and China will also need consideration, though the markets are not expecting any retaliatory move from China.

USD/JPY Price Action

This morning, the USD/JPY was down 0.07% to 131.672. A mixed start to the day saw the USD/JPY rise to an early high of 131.927 before falling to a low of 131.652.

Technical Indicators

The USD/JPY needs to avoid the 131.480 pivot to target the First Major Resistance Level (R1) at 132.186. A return to 132 would signal a bullish USD/JPY session. However, US economic indicators must support a USD/JPY breakout.

In case of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at 132.607. The Third Major Resistance Level (R3) sits at 133.734.

A fall through the pivot would bring the First Major Support Level (S1) at 131.059 into play. However, barring a dollar sell-off, the USD/JPY pair should avoid sub-130. The Second Major Support Level (S2) at 130.353 should limit the downside. The Third Major Support Level (S3) sits at 129.226.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The USD/JPY sits below the 50-day EMA (131.990). The 50-day EMA slipped back from the 200-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A USD/JPY move through the 50-day EMA (131.990) would support a breakout from R1 (132.186) to give the bulls a run at the 100-day EMA (132.364) and R2 (132.607). However, failure to move through the 50-day EMA (131.990) would leave S1 (131.059) and sub-131 in view. A move through the 50-day EMA would send a bullish signal.

The US Session

Looking ahead to the US session, it is a big day on the US economic calendar. The all-important US Jobs Report will be in focus.

Weaker-than-expected US JOLTs job openings, ADP employment change, and weekly jobless claims figures have raised expectations of softer numbers. However, economists forecast a 239k increase in nonfarm payrolls and the unemployment rate to hold steady at 3.6%.

Overnight, FOMC member James Bullard talked about sticky inflation and the need for the Fed to continue making policy moves to bring inflation to target. Hotter-than-expected numbers could fuel bets of another Fed interests rate hike.

Investors should monitor Fed chatter on monetary policy and the US economy.