USD/JPY is testing a key resistance level at the 104.00 major psychological mark prior to the release of the US non-farm payrolls figure today. Analysts are expecting to see a 200K increase in hiring, higher than the previous 175K figure and enough to bring the jobless rate from 6.7% to 6.6%.
A weaker than expected reading could spark a sudden dollar selloff as it would confirm the Fed’s assessment that the US labor market is still very weak. This could push USD/JPY back to the bottom of the channel around the 101.50 minor psychological support or to the middle of the channel around the 102.50 to 103.00 levels.
Stochastic reached the overbought level and crossed down, indicating that selling pressure is mounting. This suggests that the current highs might hold as resistance and that a selloff might be in the works, but it depends on the upcoming NFP to determine how long this drop might last.
Consolidation could take place prior to the actual NFP release although there might be some spikes here and there.
By Kate Curtis from Trader’s Way