The USD/JPY pair had a very strong showing on Thursday, which is indeed encouraging considering that the nonfarm payroll number comes out today. In other words, it appears that the market is front running the announcement a bit, and as a result it shows that we clearly have an upward bias. This of course should be anything new, but the fact that we have broken above the 94.50 resistance level is in fact encouraging.
There's absolutely no reason to sell this pair as far as I can tell. No matter what the announcement is today, I am not selling this market. In fact, if this pair pulled back like it often will do on a bad jobs number, I am simply going to let it stabilize for an hour or so, and start buying again. Alternately, we could see this market go straight through the 95 handle, which I would also see is bullish. This is one of those rare times where I think this pair will be in a "win-win situation."
Bank of Japan and the Federal Reserve Chairman
One of the most underreported things that have happened over the last several sessions is the fact that Dr. Bernanke stated in front of Congress that he "fully supported the Bank of Japan's efforts to inflate their economy." I found this interesting as this currency pair is essentially a battle between two central banks that are trying to kill their own currencies. Ironically, one of the biggest fears he is that the Federal Reserve will get aggressive in trying to bring down the value of the Dollar. This is what some people on the sidelines in this pair, but as you can see the Chairman obviously has no qualms with this pair rising after a statement like that.
Looking at this chart, it is a matter of whether I want to be long or short, just where I want to start buying again. I am already short the Yen against other currencies, so I can afford to be much more patient in this trade and many others. I think it's obvious though that there is only one direction you can trade when it comes to this market.