June 3, 2021 14:09:55
USD/JPY pointing higher
Most research tells us that USD/JPY is the most volatile major immediately after the non-farm payrolls report. This volatility lasts the most up to four hours after the release with a negative surprise triggering a bigger market reaction than a positive one. The yen is sensitive to US treasury yields whereby increasing rates will push USD/JPY higher – meaning the yen has a negative correlation to those yields.
We had previously highlighted the potential breakout to the upside due to the symmetrical triangle playing out. Today’s decent beats in the jobless numbers have pushed the pair above 110 and above the May high at 109.78 which it has been battling with over the past few sessions. With bullish momentum picking up, last Friday’s spike high at 110.20 is now in view ahead of the year-to-date peak at 110.96. Any disappointment in NFP will see USD/JPY retrace its move back to the triangle and potentially below 109, the 23.6% Fib level of this year’s high/low and the 50-day SMA.
USD/CHF upside breakout of bear channel
This major has been in a descending price channel since April with a series of lower highs and lower lows. But today’s strong jobs and ISM data has seen dollar buyers push the pair out of this with a sharp break to the upside. The bumper NFP may tell us if this is a confirmed break or just a false breakout and prices resume their downtrend back in the channel. Resistance lies above at 0.9047 with the 200-day SMA just above at 0.9072 while support below sits at this week’s low at 0.8947 and then the cycle low at 0.8930. All eyes are now on tomorrow’s headline payrolls at 12.30pm GMT.