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USD/JPY technical analysis ► review of the major events that will move the Japanese Yen and dollar/yen during the week.

ADP nonfarm employment change provides a snapshot of private sector employment in the US and precedes the official Non-Farm Payrolls publication coming on Friday. A reading which is higher than the market forecast is bullish for the dollar.

Here are the details and 5 possible outcomes for USD/JPY.

Published on Wednesday at 13:15 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. Thus, the publication of employment data is highly anticipated by the markets, and an unexpected reading could affect the direction of USD/JPY.

ADP Nonfarm Payrolls jumped to 246K in January, easily beating the estimate of 165 thousand. The markets are expecting a softer reading in February, with the estimate standing at 184 thousand.

Sentiment and Levels

The Trump administration’s first month in office has been beset by difficulties, and there could be more trouble ahead from the combative and unpredictable Trump. Still the US economy is doing well and growing optimism over a March rate hike is bullish for the US dollar. So, the overall sentiment is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 117.52, 115.90, 114.55, 113.71, 112.53, 110.83 and 109.18

5 Scenarios

  1. Within expectations: 180K to 188K. In such a scenario, the USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 189K to 193K: An unexpected higher reading can send USD/JPY above one resistance line.
  3. Well above expectations: Above 193K: Such an outcome would prop up the pair, and a second resistance line might be broken as a result.
  4. Below expectations: 175K to 179K: A smaller increase than forecast could push USD/JPY below one level of support.
  5. Well below expectations: Below 175K. In this scenario, the USD/JPY could break a second support level.

For more about the USD/JPY, see the USD to JPY forecast.

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