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Feel like trading the U.S. dollar during the NFP report?

Check out USD/JPY hanging out at make-or-break levels in the 15-minute time frame!

Before moving on, ICYMI, yesterday’s watchlist checked out a possible pullback opportunity on USD/CAD ahead of Canada’s IVEY PMI release. Be sure to check out if it’s still a good play!

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And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

U.S. mortgage rates rose again this week to 7.49%

Canada’s trade data improved from a deficit of 427M CAD to a surplus of 718M CAD in August as exports (+5.7%) outpaced imports (+3.8%)

U.S. initial jobless claims at 207K (vs. 211K expected, 205K previous)

U.S. trade deficit narrowed to a three-year low of $58.3B as exports (+1.6%) outpaced imports (-0.7%)

Canada’s IVEY PMI slowed down from 53.5 to 53.1 (vs. 50.8 expected) in September

Japan’s real wages declined for a 17th consecutive month in August as consumer inflation (+3.7%) outpaced nominal pay growth (+1.1%)

Japan’s household spending shrank by 2.5% y/y in August (vs. -4.0% expected, -5.0% previous) and marked its sixth consecutive monthly decrease

RBA’s financial stability review: Australia’s economy can weather strains in global financial markets, though the risks of a “disorderly” slide in asset prices or a slowdown in China were elevated

Switzerland’s unemployment rate remained at 2.1% as expected in September

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Germany’s factory orders rose by 3.9% in August (vs. 1.6% expected, -11.3% previous), with demand decreasing more than analysts had expected

Price Action News

Overlay of JPY Pairs 15-min
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Overlay of JPY Pairs 15-min

The major currencies mostly traded in tight ranges as Asian and early London session traders waited for the U.S. NFP reports.

That didn’t stop the Japanese yen from moving, though! Unfortunately for the safe haven, Japan printed a disappointing real wage report and made it harder for the Bank of Japan (BOJ) to justify an exit to its easy monetary policy ways.

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This, along with some profit-taking ahead of Uncle Sam’s labor data, dragged JPY lower against all of its major counterparts.

Upcoming Potential Catalysts on the Economic Calendar:

Italy’s retail sales at 8:00 am GMT
Canada’s labor market numbers at 12:30 pm GMT
U.S. NFP, unemployment rate, and average earnings reports at 12:30 pm GMT
FOMC member Christopher Waller to give a speech at 4:00 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

USD/JPY 15-min Forex

USD/JPY 15-min Forex Chart by TradingView

I don’t know if you’ve been watching USD/JPY but the pair has been showing us lower highs and lower lows since it got rejected at the big 150.00 handle.

USD/JPY is now hanging out just under the 149.00 mark which also represents the R1 Pivot Point line in the 15-minute chart. What’s more, it’s also near a descending channel resistance that’s been around all week!

The U.S. NFP Report Event Guide suggests that the actual numbers probably won’t stray far from today’s predictions. That is, we could see slightly lower labor data in September compared to July.

If the numbers come in worse than the markets’ already weak expectations, then USD/JPY may extend its intraweek losses.

The pair could turn lower from the 149.00 level and make its way to the Pivot Point line (148.63) if not its weekly lows near 148.20 at the prospect of the Fed probably not dialing down its hawkish biases.

But if the NFP reports surprise to the upside, then the U.S. dollar could regain some of its losses. USD/JPY traders could use the trend line resistance as a jumping point towards a possible retest of the big 150.00 figure.

What do you think? Will USD/JPY extend its downswing in the next trading sessions?

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