Weekly technical outlook – USD/JPY, EUR/USD, GOLD [Video]

·   USDJPY sinks below 200-SMA as Japan fires intervention ahead of NFP

·   EURUSD tests key resistance trendline after exciting rally

·   Gold continues to flatline as rate hike expectations weigh. Is a breakout approaching?

US Nonfarm Payrolls → USD/JPY

According to reports, the US and Japan finally stepped in to support the yen, sending USDJPY almost 5% lower toward May's low near 155. Hopes that the US and Iran could return to negotiations added to the selling pressure on Monday.

From a technical perspective, this intervention looks more meaningful than previous ones, as the pair has slipped below its 200-day simple moving average (SMA) for the first time in nearly a year. That puts the bears in control for now, although history shows intervention-driven moves can fade if the Bank of Japan refrains from confidently signaling further rate hikes.  

The spotlight now turns to Friday's US nonfarm payrolls report. Fed Chair Kevin Warsh has made it clear that future policy will depend on incoming data, leaving markets highly sensitive to this week's releases. Payrolls are expected to show another muted increase of 83k in July, pushing the unemployment rate slightly up to 4.3% while holding average hourly earnings flat at 3.5% y/y. Since Kevin Warsh is firmly committed to a data-dependent approach, traders will be watching closely to see whether the private ADP report and ISM PMIs can spark a more volatile market reaction ahead of the NFP release. 

A softer set of numbers could drag USDJPY toward 153.95, with 51.80-152 coming into focus next. On the other hand, payroll growth above 100k could help the pair reclaim its 200-day SMA at 157.80, while a move above 158.30 would put buyers back in charge.

Eurozone retail sales → EUR/USD

The eurozone calendar is fairly quiet this week after July inflation unexpectedly picked up, reviving expectations that the ECB could still raise interest rates by 25bps as early as September despite trying to downplay inflation expectations during last week's policy meeting. 

With retail sales the only major release, EURUSD is likely to take its direction from the US dollar. The pair is already testing an important resistance area, and a break above 1.1560 could pave the way toward 1.1600-1.1630. If the dollar regains strength instead, a drop below 1.1500 could initially pause near 1.1420 and then stretch to 1.1350-1.1365.

Geopolitics → Gold

Gold continues to trade sideways for a fifth straight week within a symmetrical triangle and near June’s lows. Reports that President Trump cancelled planned strikes on Iran and resumed talks with Tehran did little to move the metal on Monday, while higher Treasury yields and caution ahead of Friday's jobs report capped upside pressures.  

For the bulls, a break above 4,135-4,200 and the 50-day SMA could trigger a rally toward the 4,340 resistance area. Alternatively, if US data surprises to the upside and reinforces September rate-hike expectations, a move below 3,950-4,000 could hand control back to the bears.