If you think this week’s calm in will last, think again. With the US labour market and inflation in focus, history suggests volatility is just around the corner.

USD/JPY Payrolls Primer

USD/JPY has been rangebound this week heading into a period laden with major risk events, as flagged in the released last weekend. Given the historical precedent around this time of the month, the flaky price action seen recently may soon give way to something more meaningful, with U.S. and set to shake things up.

These reports could act as catalysts to either reignite the broader bearish trend or trigger a sharp bullish reversal, especially given how pessimistic sentiment towards the U.S. outlook is among investors right now.

Major Volatility Events Near

While USD/JPY has been especially volatile over the past year, driven by divergent monetary policy settings, new political leadership in both nations, heightened geopolitical tensions, and another U.S.-initiated trade war—payrolls and CPI reports have consistently packed a punch.

Source: LSEG, David Scutt

Over the past 12 months, USD/JPY’s average daily trading range has been 160 pips, or 1.07% of the prior close. On payrolls days, that climbs to 198 pips (1.32%), and on CPI days it’s even higher at 205 pips (1.35%).

Granted, these are just averages—and a data release alone doesn’t guarantee fireworks. But when a surprise hits, the moves can be big. Of the last 12 payrolls reports, the largest reaction was 2.25%, with the smallest at 0.66%. For CPI, the range was even wider—2.68% at the top and 0.76% at the bottom.

Unemployment Key Figure

Source: TradingView (U.S. EDT Shown)

Even if Friday’s payrolls release produces an average-sized move, the modest range we’ve seen this week could easily be broken, depending on the details in both the establishment and household surveys. Initially, markets tend to respond to whether payrolls beat or miss expectations, often brushing aside significant revisions to prior reports.

But if the payrolls figure sends a conflicting signal to the , don’t be surprised if the latter drives direction once initial volatility fades. After all, when officials release economic projections, they forecast unemployment, not payrolls. And given the mechanics of the household survey, the labour force participation rate arguably carries just as much weight for the Fed given the implications for unemployment and wage pressures.

USD/JPY Range May Come Under Threat

Source: TradingView

USD/JPY trades in the lower half of its recent range heading into the payrolls report. Each day this week, the price has tested and failed at 144, reinforcing its importance. On the downside, 142.42 was tagged once and bounced, adding to five prior failed attempts to close below the level since early May. That gives traders a well-defined range to work with ahead of the release.

With RSI (14) sitting marginally below 50 and trending lower, and MACD beneath the signal line in negative territory, momentum tilts to the downside—suggesting selling rallies may offer better risk-reward than buying dips in the current environment.

Beneath 142.42, the May 27 low of 142.12 is the next level of interest. A break there could put sub-142 levels back in play. While minor support is located at 141.65, recent dips below 142 have tended to reverse quickly—outside of periods of extreme market stress. That makes price action below 142 especially important, if it trades there. A clean break of 141.65 would increase the likelihood of a retest of the April swing low at 139.88.

Above 144, Wednesday’s high of 144.40 is the next level to watch. A break above could trigger a squeeze toward the 50-day moving average or resistance at 146, depending on the payrolls details and how risk assets respond.

Lately, stronger economic data has been met with a positive response across risk assets, even as it reduces the likelihood of near-term Fed cuts—suggesting that for now, good news is still good news.

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