PRE NFP Analysis: USD/JPY Might Drop Further on Bad NFP Report

January 06, 2017 10:28

As Japanese manufacturing numbers continue to improve, the core backbone of the Japanese export economy, is seen as good for the JPY. However, as Equities have been quite bullish since Trump's win, this has lead to risk-on and JPY weakness. Nonetheless, the USD Index has peaked a few days ago, and has seen weakness since FOMC minutes were released indicated a go slow on rate hikes.

The NFP with Average Hourly Earnings and Unemployment Rate is the event of the week and should provide high volatility to this pair. The ADP was worse than expected so we might see worse NFP numbers. The pair is in downtrend on intra day time frame, within a bearish channel. However, the NFP report can provide either a continuation or reversal depending on results so I'd advise you to use VPS to minimize risks. POC zone is 116.40-55 (ATR, H4, trend line, EMA89, channel top). If the report comes better then expected (also watch for Average Hourly Earnings and Unemployment rate) we might see a spike towards the zone and price might extend to 117.55 on a strong momentum. But if we see worse than expected numbers, than target might be 114.75. 114.75 is a strong support so there might be some bounce and profit taking.

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