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The US Unemployment Claims indicator is released weekly, and measures the number of people filing for unemployment for the first time during the previous week. A reading which is higher than the market forecast is bearish for the dollar.

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

Published on Thursday at 12:30 GMT.

Indicator Background

Unemployment claims is important economic indicator of consumer confidence in the economy. It helps measure future consumer spending behavior, as consumers are more likely to spend if they are confident that unemployment is dropping. In turn, an increase in consumer spending sends a strong signal that the economy is healthy and growing.

The previous release came in at a disappointing 386K, marking the fourth consecutive reading where the figures  have fallen  below the market forecast. This worrying trend has not slipped away unnoticed by the markets. The forecast for this week calls for better numbers, with a prediction of 378K. Will the indicator break the jinx and beat the market forecast this week?

Sentiments and levels

As the central banks in both the US and Japan are facing crunch time, there’s a higher chance we will get looser monetary policy from BOJ than the Fed. Expectations for QE3 in the US are unlikely to be realized, despite recent weakness, and dollar/yen has more room to rise. So, the overall sentiment is  bullish on JPY/USD towards this release.

Technical levels, from top to bottom: 82.87, 81.80, 81.42, 80.60, 80.30 and 80.

5 Scenarios

  1. Within expectations: 379K to 393K : In such a case, JPY/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 371K to 378K: An unexpected lower reading can send the pair above one resistance line.
  3. Well above expectations: Below 371K: Stronger employment numbers would be bullish for the dollar. Two or more  resistance lines  might be broken on such an outcome.
  4. Below expectations: 393K to 400K: A poor reading could push USD/JPY lower, and one  support level  could be broken.
  5. Well below expectations: Above 400K. A sharp increase  in the indicator  could lead to the pair  falling below  two or more  support levels.

For more on the yen, see the USD/JPY forecast.