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USDJPY Looks to NFP to Break Out of Triangle Pattern


The USDJPY is consolidating at the current level and traders are looking for a catalyst to spur a larger move in the pair. That catalyst could arrive today with the release of U.S. Non Farm Payrolls data. The heavily-watched release will give investors an indication of the strength of the U.S. labor market. The early signs are not ideal for dollar bulls with the ADP Employment report on Wednesday showing a big miss. The expected 950k jobs came in under 500k, whilst the jobless claims report yesterday showed that unemployment was still at elevated levels. These signs could hint that the recovery may be more prolonged than was previously hoped, but we will get the answer today from the NFPs.

The dollar has performed well against the major currencies this week after the ISM Manufacturing data beat expectations and showed expansion in the key sector. The economic turmoil created by the coronavirus lockdowns is giving traders a lot of mixed signals in data reports and this will likely continue into year-end as we approach third quarter GDP numbers. All major economies were given a pass for their dire numbers in Q2, but the next quarter will highlight who is really seeing growth.  

The Yen also has some headline risk with the upcoming vote to choose the next Prime Minister of Japan after Shinzo Abe’s retirement on health grounds. Cabinet Minister Yoshihide Suga is emerging as the favourite and he has committed to continuing his predecessor’s “Abenomics”. If that continuation was threatened then we could see volatility in the pair.

USDJPY Technical Outlook

The USDJPY is consolidating within a symmetrical triangle pattern and a breakout could see a big move develop. The resistance of the pattern is also aligning with the 50 moving average which would add further weight to a breakout. Traders should look for price to make a close outside of the triangle before taking a position. The Investing Cube Trading Course can help with technical analysis patterns. 

USDJPY Daily Chart