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USDJPY Unmoved As NFP Presents Conflicting Employment Numbers

USDMXN Higher after Mexico Consumer Confidence beat Forecasts

The USDJPY is barely down after this month’s NFP report presented data conflict, which means that no trade opportunity is present on the pair. While employment change came in at 225K, better than the 165K that the markets had expected, the unemployment rate came in at 3.6%, which was higher than the 3.5% that the markets predicted. As expected, the additions in employment came from the construction, healthcare, transportation, warehousing, hospitality as well as professional services sectors. As expected, the manufacturing sector’s performance in terms of employment was underwhelming,

My analysis of the pair yesterday shows that the numbers have moved in the same direction, which is a “no trade” situation due to the conflict presented. The Average Hourly Earnings data also could not provide a trading opportunity on the pair, as the 0.2% average earnings rise did not meet the trading deviation of 0.3% or higher for a buy opportunity on the USDJPY.

Consequently, the USDJPY is virtually unmoved and continues to trade at 109.80, down by about 20 pips from today’s highs.

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Technical Outlook for USDJPY

The support and resistance levels identified in yesterday’s NFP preview remain intact. The 109.70 resistance was breached by yesterday’s price candle, but would require today’s candle closing above it to confirm the breakout. So far, today’s pullback is currently finding support at that level (now acting in role reversal).

A close above 110.70 confirms the break and allows the USDJPY to continue its advance towards 110.58 (highs of May 20 and 21, 2019). However, news that the cruise ship quarantined off the Japanese coast has seen a near tripling of the confirmed coronavirus cases as well as the increasing count of those infected or deceased as a result of the coronavirus has a potential to send the markets into risk-off sentiment.

If risk-off sentiment returns as a result of negative news concerning the coronavirus outbreak, we may see the USDJPY pulling back towards 109.30 and possibly 108.42. The situation remains fluid.

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