Major USD/JPY resistance at 106.68 is extremely pivotal ahead of this week's close. Today's rebound on better global services PMIs nL3N25U2EKnL5N25V1O7 and less Brexit nL5N25V2FD and Hong Kong nL3N25V0NC angst will intersect with a bevy of Fed speakers , the ISM non-manufacturing and U.S. employment reports between now and Friday. Today's global rebound in stocks and riskier assets -- the kind often fueled with yen-funded carry trades -- has weakened the Japanese currency broadly. However, USD/JPY gains are lagging because traders are uneasy about dollar longs unless the services ISM Thursday and jobs report Friday suggest the contraction in the far smaller manufacturing sector isn't an imminent recession risk; one that would force the Fed to ease faster than expected.
IMM specs that went net short USD/JPY the last four weeks could be squeezed above 106.68 on strong data.
That's the daily kijun, 50% of the 109.32-104.46 post-Aug.
1 trade war escalation dive, and last week's high.
USD/JPY's made lower weekly highs since that 109.32 peak, so a weekly close above 106.68 would create risk up to 50% of the April-August drop and the weekly kijun at 108.43.
If upcoming U.S. data instead increase recession and fast Fed easing concerns, another drop into the 104.00s is possible.