USD/JPY Forecast: Rises Ahead of Non-Farm Payrolls Report

Highlights

• US Economic Data Disappoints: Recession Fears Loom 
• Initial Jobless Claims Rise: Rates to Stay Restrictive
• Non-farm payrolls report awaits amidst thin trading

Overview

The Dollar/Yen is higher on Thursday, but thin trading volumes indicate that investors are consolidating positions and waiting for the release of the closely-watched US non-farm payrolls report on Friday.

At 17:26 GMT, the USD/JPY is trading 131.637, up 0.302 or +0.23%.

US Economic Data Disappoints, Recession Fears and Rate Cuts Loom

The report follows disappointing economic data earlier in the week, including weak manufacturing and services sector data from the Institute for Supply Management and private employment figures.

Thursday’s US initial jobless claims further fueled concerns about the economy, as the data showed 228,000 people applied for unemployment benefits, and the prior week’s figures were revised to show 48,000 more applications received than previously reported.

As a result, some traders have scaled back their bets on how much longer US rates will stay in restrictive territory, while concerns about the risk of recession have been reignited.

Economists polled by Reuters expect non-farm payrolls to have grown by 239,000 in March, following a gain of 311,000 in February.

This optimism is countered by the fact that US rate futures markets are pricing in a roughly even chance of the Fed leaving rates unchanged at its next meeting, with multiple rate cuts being priced by the end of the year.

Daily USD/JPY Technical Analysis

The main trend is down according to the daily swing chart. A trade through 133.756 will change the main trend to up. A move through 129.641 will signal a resumption of the downtrend.

The main support is a long-term Fibonacci level at 131.308. Minor resistance comes in at 131.699, followed by the main resistance at 132.569.

Daily USD/JPY Technical Forecast

Trader reaction to 131.699 and 131.308 is likely to determine the direction of the USD/JPY into the close on Thursday.

Bullish Scenario

A sustained move over 131.699 will indicate the presence of buyers. If this creates enough momentum over the near-term then look for a drive into 132.569.

Bearish Scenario

A sustained move under 131.308 will signal the presence of sellers. This could be the trigger point for the start of an acceleration to the downside.