Daily Forex News and Watchlist: USD/JPY


 USD/JPY popped higher during the BOJ decision, as the central bank kept policy on hold.

Can it go for more gains with the NFP release coming up?

Before moving on, ICYMI, yesterday’s watchlist checked out AUD/JPY’s support zone ahead of the BOJ announcement. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

U.S. initial jobless claims ticked higher from previous 190K figure to 211K vs. 195K forecast

Challenger job cuts down from 440% to 410.1% year-over-year in February, with 77,770 layoffs vs. previous 102,943 increase in joblessness

BOC official Rogers says they need to see more evidence to assess if interest rates are high enough, weaker Canadian dollar also puts upside pressure on prices

BusinessNZ manufacturing index improved from 51.2 to 52.0 in February to reflect a faster pace of industry expansion

New Zealand manufacturing sales slumped 0.4% in December 2022 quarter, following earlier 5.0% increase q/q

Japanese household spending slowed by 0.3% year-over-year in January vs. projected 0.2% dip, but an improvement over previous 1.3% decline

Japanese producer prices up by 8.2% year-over-year in February vs. 8.4% forecast, previous 9.5% gain

BOJ kept interest rates unchanged at -0.10% as expected, voted unanimously to keep yield curve control policy in place

BOJ Governor Kuroda notes that Japanese economy is picking up, with capital expenditures and consumption increasing plus inflation expectations rising

U.K. economy grew by 0.3% month-over-month in January vs. projected 0.1% uptick and previous 0.5% contraction

U.K. construction output slumped 1.7% m/m instead of staying flat in January

U.K. January industrial production fell 0.3% m/m vs. projected flat reading, manufacturing production down by 0.4% vs. estimated 0.1% uptick

Price Action News

Yen pairs were cruising lower leading up to BOJ Governor Kuroda’s swan song a.k.a. last monetary policy announcement, as some were expecting a slight shift to a less dovish tone.

While Kuroda acknowledged that the Japanese economy is starting to pick up, he added that policymakers remain open to further easing if necessary, driving the yen lower across the board once more.

Furthermore, he refrained from adjusting the +/- 50bp band for the JGB yield target instead of expanding as he did so in December last year.

Upcoming Potential Catalysts on the Forex Economic Calendar:

Canadian jobs report at 1:30 pm GMT

U.S. non-farm payrolls at 1:30 pm GMT

U.S. average hourly earnings at 1:30 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

Technical Chart of the Day: USD/JPY

The BOJ decision allowed USD/JPY to bust through its short-term descending trend line and come close to the R1 near the 137.00 major psychological mark.

However, the pair returned some of its gains as dollar traders are now bracing themselves for the upcoming NFP release.

Will the pivot point near the 136.50 minor psychological level and former resistance zone keep holding as support?

This might hinge on whether or not the actual jobs figure surprises to the upside once again. If so, we might just see USD/JPY extend its gains past the recent highs and go for a rally towards R2 near the 138.00 handle.

On the other hand, a not-so-impressive read could take the pair back below the trend line and onto a test of the near-term support near the previous day lows.

A significant downside surprise might even take USD/JPY further south to S1 (135.59) or S2 (135.05). Be sure to look at other employment indicators, including the average hourly earnings and labor force participation rate, to gauge if the numbers support Fed rate hike bets!