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  • All eyes are set on the Nonfarm Payrolls events as liquidity dries up.  
  • Moving averages  offer downward slopes, while technical indicators remain flat within negative levels.

USD/JPY has been ranging sideways between 107.70 and 107.90 and into the Tokyo session and there has been little action in the first hour of trade ahead of the Nonfarm Payrolls.

With the July holidays, there was nothing to mention from overnight other than the European session came with yet more dovish sentiment long with bearish data that missed expectations, this time on the services front, which is concerning, considering that was where the ECB was relying on before needing to bite the bullet.

“Eurozone May retail sales disappointed (-0.3%m/m, est. +0.3%m/m but prior revised to -0.1%m/m from -0.4%m/m).” Meanwhile, ECB comments were dovish again but Eurozone bonds were mixed and the DAX nudged higher, following in the footsteps of yesterday’s record closes in US benchmarks.

However, this could all well unravel leading into the Nonfarm Payrolls event,  positioning for a one way or ther other outcome, or, on the other hand, the markets could stick with the prospects of a continuation of poor data and the expectations of the Federal Reserve to cut rates by between either 25 or 50 basis points.  As for yields, the US 10yr treasury futures’ yields remained at 1.94% – the lowest since 2016. Markets priced 32bp of easing at the July meeting, with a total of four cuts priced by mid-2020.  

Non-Farm Payrolls Preview: Three scenarios for the EUR/USD reaction as the Fed figures out its loosening strategy

USD/JPY levels

Valeria Bednarik, the Chief Analyst at FXStreet explained that the USD/JPY pair spent the day just below the 38.2% retracement of its latest bullish run at 107.95, the immediate resistance:

“The short-term picture is neutral-to-bearish, as, in the 4 hours chart, the price is also developing all of its moving averages, which offer downward slopes, while technical indicators remain flat within negative levels. The main support is 107.45, the 61.8% retracement of the mentioned rally, and seems unlikely the pair could break below this last due to the lack of volume.”