USD Price Action Setups into NFP, Good Friday: EUR/USD, USD/JPY

We’re nearing a unique day for markets tomorrow as the Non-farm Payrolls report is set to be released on a holiday when many major exchanges are closed. This in and of itself can lead to volatile conditions as thin liquidity meets motivation from the headlines, but we also have the brewing conflict in the Middle East to consider as that adds another very unpredictable layer to the drama.

In the USD, there remains bullish breakout potential as drawn from the ascending triangle formation that still shows on the daily chart.

For this to come to fruition, it seems that we’ll need to avoid an unwind scenario in USD/JPY, which would require the Bank of Japan to take a step back from defending the 160.00 level. But, if they did want to make a mark and if NFP comes out on the hot side tomorrow, it would be prime opportunity to maximize impact as an intervention during holiday thin liquidity conditions could create considerable volatility.

US Dollar Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

USD/JPY

I still consider this as the eye of the storm for the US Dollar and the scenario in late-January illustrates why, as a fast case of USD/JPY weakness drove the USD deep into oversold territory on the daily and even EUR/USD was rallying up to fresh highs while going deep into overbought status.

The 160.00 level has long been thought as the spot that the BoJ was going to defend at order of the Finance Ministry. The selling in the pair hit pretty quickly after the weekly open and there was a concerted one-sided move, although that only ran to around the 158.50 level and such a minor relative pullback isn’t the usual fingerprint of an intervention effort.

But given the NFP report tomorrow, where strong jobs data could push out US rate cut odds and increase the possibility of a rate hike, there could be an open door for bulls to make a move and test the resolve of the BoJ, very similar to what showed in late-2022.

For the USD breakout to take hold, it would seem that we would need the BoJ to take a step back from 160.00 defense and, instead, cast that line in the sand around the 165.00 level.

But this makes for a pensive backdrop as we go into tomorrow’s NFP report when many exchange based markets will be closed for the holiday.

USD/JPY Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

EUR/USD

For USD-weakness I still like EUR/USD a bit more. This week we saw a fresh high print in DXY but, notably, EUR/USD diverged and set a higher-low. This isn’t quite something that can be spelled as bullish longer-term, as there’s been continued hold of resistance in the 1.1600 neighborhood. But the fact that USD bulls were unable to press a fresh lower-low in EUR/USD is an early sign that there could be brewing reversal potential, especially if the ascending triangle formation in DXY is to fail.

EUR/USD Four-Hour chart

Chart prepared by James Stanley; data derived from Tradingview

USD/CAD

For USD-strength, USD/CAD is still my pick, although the past couple of weeks have shown a strong bullish breakout and the pair is now stalling ahead of the 1.4000 level. But what is attractive here in my opinion is pullback potential and higher-lows at either 1.3800 or the familiar 1.3727 level that was support last year before becoming resistance ahead of the most recent breakout.

USD/CAD Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.