Non-farm payrolls put USD/JPY in focus

FX markets are gearing up for a busy session ahead with traders focusing on the non-farm payrolls release due out later today. 

Current expectations are for 197,000 jobs to be added, with the unemployment rate flat at 7%. Goldman Sachs has upped its estimate to 200,000 and Deutsche Bank to 250,000. A bumper jobs reading would probably push the USD higher against the majors, with USD/JPY being the most significant pair to watch.

Positive unemployment claims data helped push USD/JPY through 105 temporarily in US trade before it dropped back into the 104.80 region. The pair’s recent high was at 105.44 and that will be the level to look out for should the greenback get a lift from the data. There is currently a short-term uptrend support line in place which comes in around 104.60. Potentially any dips into that region will find buyers in the near term.

Euro holds on in Asia

The euro has been quite steady in Asia after having experienced some volatility on the back of the ECB. EUR/USD plunged to 1.3548 on Mario Draghi’s dovish tone, but has since recovered to around 1.36. The ECB kept policy unchanged and emphasised it will maintain an accommodative stance of monetary policy for as long as necessary. Draghi also stated that all instruments allowed are eligible and that it will act if money markets tighten. While this is all bearish for the euro, possibly traders would have wanted to hear more about what unconventional measures it is exploring to help ignite the economy before adding to shorts.

On the European economic calendar we have French industrial production and the region’s revised GDP reading. A strong reading on the industrial production front will likely help the single currency to hold its ground ahead of the non-farm payrolls data. Should the USD get a lift from the data later today, we could see EUR/USD head back to retest lows from US trade.

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