USD/JPY looks ready to make higher highs after a downswing in March.
Are we looking at a bearish flag or a legit reversal?
I’m looking at USD/JPY’s 1-hour chart for clues!
USD/JPY: 1-hour
In case you were too busy prepping for the Easter weekend, you should know that data releases from the U.S. so far this week point to Uncle Sam’s labor market weakening thanks in part to the Fed’s aggressive tightening program.
Speculations of a recession in the U.S. helped drag USD/JPY to its 133.50 levels at the start of the week all the way to its 130.65 weekly lows.
The pair is now trading closer to 131.75, which is just above a potential ascending channel support on the 1-hour time frame.
Traders who are counting on today’s U.S. NFP report printing higher than expected for another month can price in a possible bounce to the 133.50 previous highs.
You can buy at current levels, place stops just below this week’s lows, and target 133.50 or even the 136.00 previous inflection point.
But what if this week’s data releases were right in predicting a weakening labor market?
The prospect of a recession in the U.S. could drag USD against its fellow safe-haven JPY.
A weaker-than-expected NFP release can pull USD/JPY below its ascending channel to retest previous areas of interest like 130.50 or 129.70.
What do you think? Are we looking at the start of an uptrend or just a potential bearish flag?
