USD/JPY Forecast: Modest recovery ahead of NFP

Valeria Bednarik FXStreet

USD/JPY Current price: 105.71

US Congress still unable to reach an agreement on an aid package, Trump menaced with an executive order.
The US is expected to have added 1.6 million jobs in July, unemployment rate seen at 10.5%.
USD/JPY is at risk of falling from a technical point of view but depends on US data.

The USD/JPY pair is trading modestly higher this Friday, as the greenback gets some market attention. Caution and fear are hitting high-yielding assets, which ends up favouring the American currency. Investors are now waiting for the US monthly employment report, and news related to the next aid package.

The US Congress is still unable to reach an agreement on a fiscal stimulus package, and US President Trump menaced to do it by executive order. Also, he exacerbated tensions with China, by issuing an order banning TikTok and WeChat from operating in the US in 45 days, if they are not sold by parent companies.

As for the US NFP report, the market expects that the country had added 1.6 million jobs in July, after adding 4.8 million in the previous month. The unemployment rate is expected to have shrunk from 11.1% to 10.5%, although the participation rate is also seen down, from 61.5% to 61.1%

USD/JPY short-term technical outlook

The USD/JPY pair is trading at daily highs in the 105.70 price zone, with limited bullish potential in the short-term. The 4-hour chart shows that the pair is trying to surpass a bearish 20 SMA, while still below the larger ones, as technical indicators grind higher within neutral levels. The pair could extend gains and close the week with a positive tone only if it manages to advance above the 106.10 resistance.

Support levels: 105.30 104.90 104.40

Resistance levels: 106.10 106.50 106.90

View Live Chart for the USD/JPY

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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