The Japanese yen has been the big mover in European trading, as USD/JPY briefly dipped below 147.00 amid more hawkish BOJ murmurs during the session. Outside of that, the market moves so far today have been relatively contained for the most part.

The dollar remains vulnerable, down against the likes of the pound and aussie. But the euro is the laggard as ECB policymakers are out in droves to possibly put an April rate cut back on the table. I’m still skeptical but well, the commentary has been surprising to say the least. Then, we have gold sitting higher again and flirting with the $2,170 level on the day.

In other markets, equities are fairly tentative while Treasury yields are sitting slightly lower on the day. 10-year yields are down another 2 bps to 4.071% and that is keeping the dollar fairly subdued in the bigger picture for now.

It’s all about US jobs report coming up next to set the tone as we look to wrap things up this week. As mentioned earlier:

This looks to be a market that is wanting a release that will validate the moves this week i.e. softer dollar, stronger risk trades. That means it is going to take quite some convincing to turn sentiment around as we look towards the weekend. And barring any material change to the Fed outlook on the hawkish side, I reckon the play will be to fade any opposite reaction to the flows we have seen in the last few days. But we’ll see.

Here are a couple of previews ahead of the main event:

• Preview: February non-farm payrolls by the numbers. Eyes on earnings
• Goldman: What to expect from the US jobs report on Friday
• Here is what to watch for an extreme surprise in Friday’s US employment report

This article was written by Justin Low at www.forexlive.com.

USD

• The Fed left interest rates unchanged as
  expected at the last meeting and dropped the tightening bias in the statement.
• The US PCE came
  in line with expectations.
• The US ADP and
  the US Job Openings missed
  expectations, followed by weaker than expected US Jobless Claims.
• The latest US ISM
  Manufacturing PMI missed expectations by a big margin
  remaining in contraction with the US ISM Services
  PMI
  following suit but holding on in expansion.
• The US Consumer
  Confidence missed expectations across the board.
• The market expects the first rate cut in June.

AUD

• The
  RBA left interest rates unchanged as expected with the central bank
  maintaining the usual tightening bias and data dependent language.
• The
  recent Monthly CPI report missed expectations across
  the board which was a welcome development for the RBA.
• The
  latest labour market report missed expectations by a big
  margin.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  latest Australian PMIs showed the Manufacturing PMI falling
  back into contraction while the Services PMI jumped back into expansion.
• The
  market expects the first rate cut in August.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD eventually
bounced around the key 0.65 support zone and
extended the rally into the swing high at 0.6623. A successful break above this
level should open the door for a rally into the 0.69 resistance next. We can
also notice that the price is a bit overstretched as depicted by the distance
from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that in case we get
a pullback, the buyers will have the first support around the 38.2% Fibonacci retracement level
where they will also find the red 21 moving average for confluence. The
sellers, on the other hand, will want to see the price breaking below the
Fibonacci level to increase the bearish bets into new lows.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the pair now trading inside a rising
channel with the red 21 moving average acting as dynamic support. A break to
the downside should trigger a selloff into the Fibonacci level with the sellers
piling in with more conviction.

Upcoming Events

Today we conclude the week with the US NFP report.

This article was written by FL Contributors at www.forexlive.com.

• GDP +0.1% vs +0.1% y/y second estimate

This just confirms zero growth in the euro area in the last quarter, after having marginally contracted in Q3 2023. It was a very poor year to say the least for the Eurozone but at least a technical recession is avoided, by the thinnest of margins.

This article was written by Justin Low at www.forexlive.com.

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It looks like we’ve broken through the first key technical hurdle for USD/JPY on the way down, as sellers are firmly pushing price below the 100-day moving average (red line) of 147.70 today. The hawkish murmurs surrounding the BOJ continue to grow, as it seems like policymakers are teeing up a move in two weeks‘ time.

The spring wage negotiations is the key factor in play at the moment and we are likely to see some news on that on 13 March next week. That will come before the BOJ meeting on 19 March, leaving some room for policymakers to deliberate ending negative rates as early as this month.

And so, the yen is continuing to run higher as such after the BOJ got the ball rolling earlier this week.

USD/JPY is now down to 147.10 and may look to dip much further from here. The 38.2 Fib retracement level offers some minor support at 146.82 next. But I’m watching the 1 February low near 146.00 and the 200-day moving average (blue line) at 146.15 as the next big support region for the pair.

This article was written by Justin Low at www.forexlive.com.