On the daily chart below, we can see that after breaking out of the channel, it was pretty much a one-way road for the pair. USD/JPY is correlated with US yields, which were rising fast in the past weeks, and this yielded (pun intended) such a big rally. We can see that the buyers couldn’t break the 138.00 handle and the price pulled back notably in the past days.

US yields fell even if the Fed Chair Powell signaled the chance of a 50bps hike and a higher terminal rate. Maybe the market is already pricing a policy mistake which would lead to a deep recession, or it may be just a correction from overextended levels. The moving averages point to the upside and the buyers will keep on leaning on them as support as long as the fundamentals remain in favour of the USD.

USD/JPY

On the 4 hour chart below, we can see that the price has pulled back right to the trendline. The recent spike up was caused by the BoJ which kept its monetary policy unchanged even though there was some expectation of a surprise. Maybe the entire move down was indeed just positioning into the BoJ meeting and now that is gone, the market will focus to the next big event: the NFP report today.

USD/JPY

On the 1 hour chart below, we can see that the recent spike up made the moving averages to cross upwards and the price is now testing the red long period moving average. This looks like a clear setup for today’s NFP report:

· If the data beats expectations, we should see a rally and the buyers firmly in control targeting a breakout of the 138.00 handle.

· If the data misses expectations, we should see a breakout of the trendline and sellers targeting the 134.50 support.

USDJPY