The USD/JPY price rallied in the short term as the DXY and JP225 have managed to rise. Still, the pair is located within a down-channel, signaling strong selling pressure despite yesterday’s rebound.

The price has changed little today, and most likely, the traders are waiting for the US Non-Farm Payrolls before taking action. Today, the US has published the Unemployment Claims indicator, which has dropped from a revised 399K to 385K, failing to reach the 382K estimate.

Moreover, the United States Trade Balance dropped further to -75.7B from -71.0B, much below -74.2B expected. Tomorrow, the volatility could be high around the NFP, which is expected around 870K, while the Unemployment Rate could drop from 5.9% to 5.7%. The Average Hourly Earnings could increase by 0.3% in July.

The Japanese Average Cash Earnings, Household Spending, and the Leading Indicators could bring life to this pair in the early morning.

USD/JPY price technical analysis: Can bulls break the channel? 

(Click on image to enlarge)

USD/JPY 4-hour price chart

USD/JPY developed a downtrend channel after making a valid breakdown through the major uptrend line. It has failed to stabilize under the 109.00 psychological level after the US ISM Services PMI has reported better than expected data in yesterday’s session.

The pair gained a little in the last minutes as the Dollar Index has managed to rise. Also, the JP225 is still trading in the green. Unfortunately, we don’t have a trading opportunity right now as USD/JPY is located under the downtrend line and far below the ascending pitchfork’s median line (ml).

USD/JPY could drop anytime again if it stays below the downtrend line within the down channel’s body. However, we may have a long opportunity if the price makes a valid breakout above the downtrend line.

A potential further decline could be signaled by a new drop below the 23.6% retracement level and, after making a new lower low, drop under 109.40 today’s low. Technically, a larger correction phase could be activated by a valid breakdown below the ascending pitchfork’s lower median line (LML).