In Tuesday’s JPY report we suggested a break above 111.54 assumes a run towards the 113.17/39 highs. With Tuesday’s break higher, we retain this bias.
The range expansion candle on Tuesday more than cleared the six days of compression, whilst providing a daily close confirmation above May’s high. And although we’ve seen a minor retracement, the daily structure remains constructively bullish.
Three distinct higher swing lows have occurred since the 106.64 low to show the pair is in demand, with support being found at 110.59 with a bullish hammer. With Tuesday’s push higher, we see that dominant momentum has realigned with the daily trend. A spinning top Doji on Wednesday suggested a reluctance to push higher, yet we take comfort that it remains supported above May’s high and the 20-day MA. Going forward, 111.32/40 is a pivotal area for bulls and bears.
Dropping down to the four-hour chart we can see that a bullish RSI divergence warned of weakness to the downside before support at 110.59 was confirmed. In typical pre-NFP style, USD/JPY is trading within a tight range although two higher swing lows show the intraday day trend is also bullish.
Of the several data points within today’s NFP report, average hourly earnings is the more likely to provoke a notable market response. And, with the FED on track to hike in September, we could find the more volatile reaction if it misses regardless of what happens with unemployment or employment change. But until then, we’ll stick with the trend and let price action be our guide.