USD/JPY Bulls Need a Hot US Jobs Report to Target 144

Highlights

• It is a busy day ahead for the USD/JPY, with the US Jobs Report in the spotlight.
• After the BoJ tweak to the Yield Curve Control Policy, a hotter-than-expected US Jobs Report could reopen the door to a September Fed rate hike.
• The near-term technical indicators remained bullish, signaling a return to 144.

On Thursday, the USD/JPY fell by 0.55% to wrap up the day at 142.521. Bank of Japan moves to tackle JGB yields and weaker-than-expected ISM Non-Manufacturing PMI numbers weighed.

This morning, there are no economic indicators from Japan or China for investors to consider. The lack of economic indicators will leave investors to respond further to the overnight US Jobless Claims and all-important ISM Non-Manufacturing PMI numbers.

The US Session

It is a busy US session, with the US Jobs Report to draw interest. A pickup in wage growth and a steady US unemployment rate would refuel bets on a September Fed rate hike. Economists forecast average hourly earnings to slow from 4.4% to 4.2 and the unemployment rate to hold steady at 3.6%.

The US labor market forms part of the Fed’s dual mandate. The FOMC Committee forecasts the longer-run normal rate of unemployment to be 4.1%. The US unemployment rate fell from 3.7% to 3.6% in June. Tighter labor market conditions would lead to higher wage growth levels and a demand-driven inflation pickup. Higher borrowing costs would curb hiring and wage growth.

USD/JPY Price Action

Daily Chart

The Daily Chart showed the USD/JPY hovered above the 141.2 – 141.9 support band. Despite Thursday’s bearish session, the USD/JPY remained above 50-day (140.642) and 200-day (137.086) EMAs, sending bullish near and longer-term price signals.

Notably, the 50-day EMA pulled further away from the 200-day EMA, affirming the near-term bullish trend.

Looking at the 14-Daily RSI, the 56.82 reading signals a bullish outlook, supporting a run at the 144.3 – 145.0 resistance band. However, a USD/JPY fall through the 141.9 – 141.2 support band would give the bears a run at the 50-day EMA (140.642).

4-Hourly Chart

Looking at the 4-Hourly Chart, the USD/JPY faces strong resistance at 143. However, the USD/JPY sits above the 141.9 – 141.3 support band and the 50-day (141.911) and 200-day (141.108) EMAs, sending bullish near and longer-term price signals. Significantly, the 50-day EMA pulled further away from the 200-day EMA, affirming the near-term bullish trend.

However, a USD/JPY fall through the 50-day EMA (141.911) and the upper level of the 141.9 – 141.2 support band would bring the 200-day EMA (141.108) and sub-140 into play.

The 14-4H RSI reading of 52.13 sends moderately bullish signals, with buying pressure outweighing selling pressure. Notably, the RSI aligns with the EMAs and supports a run at the 144.3 – 145.0 resistance band.