Yen gains traction but traders remain cautious ahead of US labor report

The USDJPY dipped below 140 mark on Tuesday, adding to reversal signals which are developing on daily chart.

Pullback from new 2023 peak (140.93) comes after Doji candle on Monday showed indecision, signaling that larger bulls were running out of steam.

Strongly overbought daily studies prompted traders to start collecting profits, as uncertainty grows ahead of Friday’s release of US labor report for May.

Today’s comments from Japanese officials that market moves will be closely watched and appropriate response may follow if needed, provided fresh tailwind for yen.

Correction is very likely at this point, as indicators on daily chart turned south and about to emerge from overbought territory, though the action may be milder as traders remain cautious and await signals from US jobs data.

US NFP is forecasted at 180K in May vs 253K in April and significant drop below consensus would help yen to regain ground and probably test 200DMA pivot at 137.25.

Conversely, strong NFP beat would spark fresh acceleration higher and possible test of key Fibo barrier at 142.50 (61.8% of 151.94/127.22 downtrend).

Res: 140.00; 140.93; 141.97; 142.50
Sup: 138.81; 137.90; 137.77; 137.25