USD/JPY trades near the highs for the day close to 112.90
Some traders are citing short covering ahead of European trading as the reason for the move higher in USD/JPY, with the Nikkei supportive of that factor closing higher by 0.8% earlier. But from a technical standpoint, the bounce also comes after price tested the 100-day MA (red line) overnight and failed to break below it once again.
It was a timely recovery for US stocks that helped to alleviate pressure off the pair and once again the 100-day MA fails to be breached since April this year. As mentioned yesterday, that is a pivotal point for the pair as a break below it will signify further downside but at the moment it is still the key level that buyers are holding on to as their last line of defense.
There’s also large expiries on the day around 112.50 to 113.00 so that will keep the pair trading in a narrow range ahead of the non-farm payrolls release. Any upside break will also be met by resistance from the July high @ 113.17 and will be limited by further expiries at 113.50.
With US equity futures providing little direction for trading so far, it’s looking like the pair may be set for a bit of a more rangy time in European trading as traders await the payrolls data to come later in the day.