USD/JPY is calm before the storm

The bullish momentum we have been observing this week disappeared as the pair approached a key resistance represented by 104. But there are also fundamental reasons that keep traders from making bets for now, namely NFP. Once the data is out, USD/JPY will be free to demonstrate elevated volatility again. The main scenario is still a break-out to the upside towards 105.50, but it will mainly depend on market's interpretation of the new figures.

Even though the share of longs (62%) is presently well below its 10-day average (69.5%), the sentiment with respect to the U.S. Dollar is largely bullish. At the same time the resistance to a rally is weakening—the share of sell orders dropped from 61% to 49%.