USDJPY readies a breakout ahead disturbing nonfarm payrolls data

[vc_row][vc_column][vc_column_text]The USDJPY pair was little changed today as the market reacted to weak data from Japan and as the participants waited for the US nonfarm payrolls data that will be released today.

Japan household spending tumble

The USD/JPY was muted as the Bureau of Statistics released the household spending and overtime data for the month of March. The overtime pay, which is often seen as a measure of how active corporations are tumbled by a record 4.10% in March. In the same month, household spending declined by about 6% while average cash earnings rose by just 0.1%.

These numbers show that the April numbers will be much worse because the government had not announced the state of emergency in March. Also, they point to a deeper recession this year as the country battles the coronavirus pandemic. Analysts polled by Reuters predict that the economy declined by 4.5% through March this year. They also predicted a sharp 22% decline in the economy in the second quarter before rebounding slightly in Q3.

Another data released by Markit showed that the service sector plunged in April. The PMI came in at a record low of 21.5 from the previous 33.8.

US nonfarm payrolls eyed

Perhaps, the USD/JPY pair was unchanged because the market is waiting for the worst nonfarm payrolls data ever. Analysts polled by Reuters expect the economy to have lost more than 20 million jobs in April and the unemployment rate to soar to more than 14%. At the same time, they expect the average working hours and wages to have dropped in April. On a positive note, there is a likelihood that these will be the worst numbers because many states have started to reopen.[/vc_column_text][vc_column_text css=”.vc_custom_1585658788094{background-color: #f9f9f9 !important;}”]

Download our Q2 Market Global Market Outlook

[/vc_column_text][vc_column_text]

USDJPY technical outlook

On the four-hour chart, the USD/JPY has been on a slow downward trend since the end of March, when it rose to about 111.75. At the current price of 106.40, the price is along the 50% Fibonacci retracement level and below the 50-day and 100-day EMAs. Further, the price seems to be forming a falling wedge pattern, which means that an upward breakout is possible. For this to happen, bulls will need to move above the 50-day and 100-day EMA s and the upper resistance level at about 107.00.

On the flip side, a move below the 50% retracement and the psychological level of 106.00 will invalidate this prediction. It will mean that there are still sellers in the market, who will be keen to push the price lower.[/vc_column_text][vc_column_text css=”.vc_custom_1565176883833{background-color: #f9f9f9 !important;}”]

Don’t miss a beat! Follow us on Telegram and Twitter.

[/vc_column_text][vc_single_image image=”44937″ img_size=”full” onclick=”link_image” title=”USD/JPY technical outlook”][vc_column_text]More content

[/vc_column_text][vc_column_text css=”.vc_custom_1587740294122{background-color: #f9f9f9 !important;}”][adrotate banner=”47″][/vc_column_text][/vc_column][/vc_row]