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James Hyerczyk
USD/JPY

The Dollar/Yen is trading mixed on Friday on extremely low volume as most of the major players have taken to the sidelines ahead of the U.S. Independence Day bank holiday.

On Thursday, traders had a mixed reaction to the U.S. labor market data. The Forex pair was capped by the stronger-than-expected U.S. Non-Farm Payrolls report, but underpinned by another rise in Weekly Jobless Claims. The NFP report was about the past, while the Weekly Initial Claims report is about the future.

At 07:52 GMT, the USD/JPY is trading 107.480, down 0.018 or -0.02%.

The inability to follow-through to the downside after Wednesday’s steep plunge indicates that investors may be leaning more toward the safe-haven U.S. Dollar because the on-going spike in coronavirus infections threatens to once again put the brakes on the economic recovery.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on July 1.

A trade through 108.163 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend changes to down on a trade through 106.074.

The minor trend is also up. It will change to down on a move through 106.801. This will confirm the shift in momentum.

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Daily Swing Chart Technical Forecast

With the U.S. banking system closed, we’re not looking for much movement on Friday.

I don’t think we saw the true reaction to the jobs data on Thursday either. This is likely coming on Monday or Tuesday after traders have taken the weekend to digest the data.

Over the near-term, the USD/JPY is likely to be headline driven. Any headlines calling for an improving U.S. economy are likely to dampen the dollar’s appeal as a safe-haven asset, pushing the USD/JPY lower. Headlines pointing toward a weaker economy due to the resurgence of coronavirus infections will likely drive up demand for the safe-haven greenback.

For a look at all of today’s economic events, check out our economic calendar.
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