USDJPY recently broke outside its descending triangle pattern visible on the 4-hour time frame. Price found resistance around the 104.00 handle and might be ready for a pullback to the broken triangle resistance at the 101.50 minor psychological level.
Applying the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with this broken triangle resistance and area of interest. This is also near the moving averages, which could hold as dynamic support levels.
However, the 100 SMA is below the longer-term 200 SMA, signaling that the path of least resistance is to the downside. The gap between these moving averages is narrow so a crossover could be possible. Stochastic is heading south from the overbought zone to show that bearish pressure is picking up and that a correction is due.
The main catalyst for this pair today would be the NFP release, which might show a 171K increase in hiring versus the previous 151K figure. Leading jobs indicators have been printing improvements so traders have set their expectations up for an upside surprise, which could support Fed rate hike expectations for December or even November.
A downside surprise, however, could spark a sharp dollar selloff as this would douse hopes for Fed tightening. Still, analysts believe that any reading over 100K could keep tightening expectations in play keep the dollar afloat.
Data from Japan has been mostly weaker than expected, ramping up speculations that the BOJ would have to increase stimulus at some point. Apart from that, bulls appear to be booking profits off their long positions and have run out of steam in pushing yen pairs down.