The USD/JPY pair rallied again during the session on Friday, to bump up against the bottom of the triangle that I have been talking about recently. The real question now becomes whether or not it is a true triangle, or is simply a failed pattern. We don't know this yet, but a move above the 99 handle would negate the triangle for me. The alternative of course is the possibility of a negative candle here, which would just reinforce the idea of previous support being resistance now.
This is going to be an interesting currency market anyway, simply because there are two central banks here working against the value of the currency, and trying to keep monetary policy as loose as possible. Because of that, I think that this market is going to be a bit difficult to trade, but do recognize that we are at somewhat of an inflection point.
Nonfarm payroll numbers
We still haven't seen the nonfarm payroll numbers out United States, and that is a big issue when trading this pair. Under normal circumstances this pair moves quite a bit due to that economic announcement, but during these times of uncertainty, the nonfarm payroll numbers become even more important. That's because the Federal Reserve is still thinking about tapering off of quantitative easing, and as a result the employment situation becomes that much more interesting. After all, several of the board members from the Federal Reserve have stated that tapering off of quantitative easing is a bit of a concern as long as the employment situation in the United States looks relatively weak. Because of this, obviously the employment announcements are vital.
As soon as we get the jobs number, the market could make a better and informed decision. However, we have to wait until the United States government decides that it doesn't want to be shut down anymore, and other words making some type of extension of the debt ceiling yet again. That being said, it's like a lot of volatility between here and there, but as soon as those numbers come out, we can make a little bit longer-term decision.
