USDJPY – bullish and bearish set ups
The USDJPY remains in consolidation mode hovering around the 120-region as the market awaits US NFP later today.The trade has been sluggish weighing on th eprice action is the rebound in household spending, which rose by 2.9% y/y in Aug (Jul: -0.2%), coming in better than market estimate of +0.3%. This suggested that the expected economic contraction in 3Q might not be as deep as previously thought. The less than dire data release gives rise to questions regarding the growing consensus view that the BOJ will increase monetary easing in its October sessions.
I am tracking to probable price paths which could play out under a bullish or bearish interpretation of today’s’ NFP release. Both set ups look for a range break, stop run and then a quick reversal to retest the broken resistance or support before an extension in the direction of the original range expansion.
- The bullish trade would be a topside break of 121.50 then a pullback to test 121 as support. I would enter longs leaning against 119.50 targeting 125.
- The bearish trade would be a breach of 119 support then a snap back to test the 119 level as resistance where I would enter shorts leaning against 120.50 resistance targeting 116.