USD/JPY daily chart
The Bank of Japan has started the ball rolling on USD/JPY this week, but so far we have seen the decline stall at the first key hurdle. It shook off the 150.00 mark on Wednesday and fell below 148.00 yesterday. However, there is a slight respite in the decline as it tests the 100-day moving average (red line). Its level is currently seen at 147.70.
As US employment statistics are pending, price trends are likely to remain stagnant around this area for the time being. Therefore, we cannot expect any major turbulence to occur in future European transactions.
On balance, the pair is still biased towards the downside at the moment. Traders looking into this are now sensing a hawkish shift by the Bank of Japan and the strength of bidding in the bond market this week. The 10-year Treasury yield has fallen further to 4.08%, about 27 basis points below its high just two weeks ago.
Nonfarm payrolls data will determine what happens next by the end of the week. But at this stage, I would like to sell any pop high on USD/JPY. Unless there is a big surprise in the data that warrants a change in the Fed’s outlook, which I think is unlikely.
