The Bank of Japan is likely to keep its ultra-loose monetary policy amid the expected GDP fall and low inflation due to low oil prices. On Friday morning, the regulator releases its Monetary Policy Statement.
Then, market participants will turn their attention to the publication of US Non-farm Payrolls for July. Fed may postpone its interest rate hike if only the statistics come significantly worse than expected (+222K). So, the American currency may weaken for a while.
However, the difference between the monetary policies, led by Fed and BoJ, should further strengthen the pair in the medium term.
Today, the USA releases its Employment and Jobless Claims statistics.
Support and resistance
Since 9 July, the pair has been growing and, given the fundamental factors, the growth should continue, as the target level 124.50 was overcome yesterday.
If NFPR does not disappoint market participants, the pair should strengthen to 125.85 (year high) and, probably, further to 135.00 (February 2002 high)
OsMA and Stochastic on the 4-hour and daily charts are in the buy zone.
Support levels: 124.50, 124.10, 123.50, 123.15.
Resistance levels: 125.00, 125.65.
The pair is likely to trade flat until tomorrow.
Long positions are more preferable. Open Buy Stop at 125.20 with targets at 125.65, 125.85, 126.00 and stop-loss at 124.40.
Open alternative short positions when the level of 123.50 is broken through with targets at 123.15, 122.35.