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USD/JPY - Bulls Taking Control

The USD/JPY is clearly showing a bullish bias in the 4H chart. It started early in February when a sharp rally broke a period of consolidation/bearish correction, and rallied from around 116.70 up to about 120.48. After this breakout rally, the USD/JPY pulled back but held above 118, which kept a bullish bias, especially with the 4H RSI holding above 40 after tagging above 70. 

USD/JPY 4H Chart 3/5

(click to enlarge)

Also, we can see the market holding above the 200-period SMA now that it has crossed over it. This is a bullish slingshot signal. Indeed, price continues to be bullish this week. It is actually accelerating after the slow drift in the second half of February. The pair looks poised to test the 120.48 high, above which USD/JPY will have the 2014-high of 121.70 in sight.

Of course, the US NFP on Friday could help push this along if the reading is better than expected and above 250K. Watch out for an upwards  revision of the previous month's data, as we saw in the ADP data. Strong jobs data, if accompanied by wage growth will guide the FOMC towards a rate hike around mid-year. The anticipation of a good jobs report is written all over the USD/JPY and other USD-crosses. The market is usually right, and I would favor a USD-strong reaction after the US NFP after the dust settles.