The Dollar/Yen is edging higher early Friday well ahead of the release of the U.S. Non-Farm Payrolls report at 12:30 GMT. We could be looking at position-squaring ahead of the report, or early signs that investors have fully priced in at least a 25-basis point rate cut in July.

Traders will be looking at the jobs data to determine whether it helps make or break the case for a rate cut later in the month. Traders are looking for the headline payrolls number to show the economy added 160,000 jobs in June, up from 75,000 in May. The unemployment rate is expected to come in unchanged at 3.6% and Average Hourly Earnings are expected to have risen by 0.3%.

At 06:35 GMT, the USD/JPY is trading 107.921, up 0.096 or +0.09%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 108.534 will change the main trend to up. A trade through 106.775 will signal a resumption of the downtrend.

The minor trend is also down. A trade through 107.534 will indicate increasing selling pressure.

The main range is 110.677 to 106.775. Its retracement zone at 108.726 to 109.186 is resistance.

Another main range is 109.930 to 106.775. Its 50% level at 108.353 is resistance.

The intermediate range is 108.805 to 106.775. The USD/JPY is currently trading inside its retracement zone at 107.790 to 108.030.

The short-term range is 106.775 to 108.534. Its retracement zone is currently acting like support. It may have stopped the selling on July 3 at 107.534.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the USD/JPY on Friday is likely to be determined by trader reaction to the intermediate 50% level at 107.790.

Bullish Scenario

A sustained move over 107.790 will indicate the presence of buyers. The first target is the intermediate Fibonacci level at 108.030. This is a potential trigger point for an acceleration to the upside with the next targets the main 50% level at 108.353, followed by the main top at 108.534.

Bearish Scenario

A sustained move under 107.790 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the low at 107.534, followed by the short-term retracement zone at 107.468 to 107.304.

Aggressive counter-trend buyers could come in on a test of this zone. They will be trying to form a potentially bullish secondary higher bottom.

Overview

An across the board strong report will be bullish for the USD/JPY. Even if the headline number beats the forecast, any weakness in the Unemployment Rate or Average Hourly Earnings will likely mean the Fed cuts 25 basis points. A complete miss will raise the odds of a 50 basis point cut.