USD/JPY avoiding break below 112.00; dollar bulls anxiously await NFP

Currently, USD/JPY is trading at 112.62, down -0.55% or (62)-pips on the day, having posted a daily high at 113.36 and low at 112.05.

The American dollar vs. Japanese yen continued the last leg down from the 155.5 handle towards a critical level near 112.00 as yesterday's FOMC statement delivered more words than real hopes for traders and investors that had no other options than reduced their long-dollar allocation. 

As of writing, the pair recovered 76-pips from today's low as bears failed a 2nd attempt to break to the downside 112.00. Hence, the US dollar needs a 'Godfather' and what a better boost than a robust NFP figure; Are Initial Jobless Claims and ADP Report positive readings a decent pre-game indicator? Well, markets are hours away to find out. 

Historical data available for traders and investors indicates during the last 5-weeks that USD/JPY pair had the best trading day at +1.76% (Jan.18) or 201-pips, and the worst at -1.65% (Jan.05) or (190)-pips.

NFP Preview: Will strong payrolls & wage growth help US dollar regain poise?

Technical levels to consider

To the downside, support levels might now be seen at 112.04 (low Feb.2), followed by 110.26 (low Nov.22) and 109.55 (100-DMA). On the upside, resistances are seen at 113.90 (high Feb.1), then at 115.00 (50-DMA) and finally at 116.85 (high Jan.11). Despite dollar correction, there is evidence on the daily chart to consider a bullish divergence a bullish divergence if the 112.00-111.60 region is protected, then the greenback may resume the uptrend move to challenge the critical resistance near its 50-DMA.

On the long term view, if 118.59 (high Jan.1) is in fact, a medium-term top, the upside seems limited for the pair at 115.55 (short-term 61.8% Fib). Also, 112.37 (short-term 50.0% Fib) would become another resistance level if prices open and close below it. To the downside, supports are aligned at 111.64 (long-term 50.0% Fib), then at 109.19 (short-term 38.2% Fib) and finally below that at 105.26 (short-term 23.6% Fib). 

USD/JPY Forecast: Bearish breakout around the corner