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James Hyerczyk

The Dollar/Yen is trading flat early Friday as investors square positions ahead of the U.S. Non-Farm Payrolls report. On Thursday, the Forex pair plunged as investors shed risky assets due to renewed concerns over U.S.-China trade relations.

The tightening of the interest rate differential between U.S. Government bonds and Japanese Government bonds after the U.S. Federal Reserve cut its benchmark interest rate on Wednesday and the Bank of Japan decided to leave rates unchanged early Thursday, drove the price action by making the U.S. Dollar a less-desirable asset.

At 12:30 GMT, the U.S. government will release the October Non-Farm Payrolls report. The headline is expected to show the economy added 90K jobs last month. The unemployment rate is expected to rise to 3.6% and Average Hourly Earnings are expected to have risen 0.3%.

At 03:49 GMT, the USD/JPY is trading 108.042, up 0.020 or +0.02%.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Thursday when sellers took out the previous swing bottom at 108.252. Helping to drive the USD/JPY lower is the closing price reversal top from October 30 and its subsequent confirmation on Thursday. This could lead to a minimum 2 to 3 day correction.

A trade through 109.287 will negate the closing price reversal top and signal a resumption of the uptrend.

The short-term range is 106.485 to 109.287. Its 50% level at 107.886 is the first downside target. This level may have stopped the selling earlier today.

The major range is 104.600 to 109.317. Its retracement zone at 107.463 to 106.890 is the next key downside target.

The main range is 104.463 to 109.287. Its retracement zone at 106.701 to 106.173 is additional support.


Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 108.042, the direction of the USD/JPY on Friday is likely to be determined by trader reaction to the 50% level at 107.886.

Bullish Scenario

A sustained move over 107.886 will indicate the presence of buyers. If this move creates enough upside momentum then look for a minimum retracement into 108.589.

Bearish Scenario

A sustained move under 107.886 will signal the presence of sellers. If this generates enough downside momentum then look for a plunge into 107.463. This is another trigger point for an acceleration into the major 50% level at 106.890.

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