It has already been a volatile week for currencies, and traders expect the lively market conditions to persist through the New York close on Friday. Geopolitical factors have played a major role in market movements this week, but traders anticipate a shift in focus toward macroeconomic fundamentals, with a series of key data releases scheduled for the remainder of the week, culminating in the U.S. employment data early in the New York session on Friday.
There has been significant volatility across major currency pairs this week, but as usual, the standout has been USD/JPY, and this trend is expected to continue in Friday’s trading sessions. USD/JPY has dropped nearly 7% since its high in early January, and despite a rally off last night’s lows, it remains vulnerable to further downside movement. Interest rate differentials have played a significant role since the start of the year, as the Bank of Japan remains hawkish while expectations for a Federal Reserve rate cut have shifted forward from September to June—or even May. If the jobs data also indicate a slowing U.S. economy, expectations could move even closer, further widening the interest rate differential and pushing USD/JPY lower.
The consensus forecast for the headline NFP figure is for 160,000 jobs to have been added in the past month, with average hourly earnings increasing by 0.3% and the unemployment rate dipping to 4.0%. A significantly weaker-than-expected report could see the recent low just above 148.00 tested, while a stronger result would likely push the pair higher, with initial resistance around 152.30—where both the daily resistance trendline and the 200-day moving average currently align.
Key Levels to Watch
Resistance 2: 158.03 – Long-Term Trendline Resistance
Resistance 1: 152.30 – Trendline Resistance and 200 Day Moving Average
Support 1: 148.07 – Trendline Support and 2025 Low
Support 2: 144.40 – Long-Term Trendline Support
