USD/JPY rallied roughly 100 pips to 120.91 before settling near 120.75 following a 295,000 job gain in February. Market consensus was for a rise of 240,000 jobs. The Unemployment rate dropped 0.1% to 5.5%, the lowest level since May 2008. The positive employment report helps the argument that Federal Reserve will hike rates in June. Concerns that wages are not picking up however could become a problem and support the Fed waiting to hike until September or later. Average hourly earnings gained 0.1% in February, year-over-year a rise of 2.0%.
Price action on the four-hour USD/JPY chart shows key advance that occurred once price broke above the February high of 120.47. The bullish trend reaffirmed itself after the good jobs figure and appears poised to make a run towards the 2014 high of 121.84. It is around that key high that a double top pattern and ABCD pattern may form and support a slight pullback. Further upside may target the 123.55 level and eventually 125.72.
The trade: Buy USD/JPY 120.75, with a stop loss at 120.25 and take profit at 121.75. The risk/reward ratio is around 1:2
Edward J. Moya
Senior Market Strategist
WorldWideMarkets Online Trading