The USD JPY is being dominated by technical trading as this pair is locked inside of a key retracement zone at 98.53 to 99.22. This market may stay in this range until Friday when the U.S. Non-Farm Payroll Report is released and the Fed’s bank stress test results are made public.
Trading was choppy in the Japanese all day. Traders can’t seem to make up their minds because of the two-sided trade in the stock market and optimistic testimony by Fed Chairman Bernanke. The lack of fresh economic news today is also giving the USD JPY a reason to trade in a tight range.
Unfortunately this type of trading could be the theme until Friday when the U.S. releases the results of the latest Non-Farm Payrolls Report. Pre-report estimates are for job losses for April to total close to 640,000. Any significant figure above this guess will be the catalyst to drive this market lower.
Technically the USD JPY is caught in a range between a pair of retracement numbers at 98.53 and 99.22. Don’t be surprised if the market stays in this zone until Friday. If it doesn’t, the best advice is to go the way of the move.