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(BFW) Daily FX View: MXN, JPY Coiled For Breakouts On U.S. NFP

USD/MXN, USD/JPY nearing intersection on multi-week pennant formations, NFP report may provide impetus for break in either direction.

• Sept. NFP est. 180k, range 100k-256k; unemp. rate est. unch. 7.3%

• USD/JPY weekly chart shows pennant forming since May closing within two weeks
• USD/JPY gains on NFP beats of 50k+ range from median 0.47% to max. 2.61%; declines 0.55% median, 1.54% max. on misses >99k, data back to 2000 show
• Resistance 98.47 pennant top, breach targets 100.61 Sept. high, ~101.5 Apr. 2009, July highs, 103.74 May high
• Support 97.89 pennant bottom, 96.57 Oct. low, 95.81 Aug. low, 93.79 June low

• USD/MXN weekly chart shows pennant formation from July near to closing; pair trades near middle of pennant range
• Breach of 13.1395 pennant top targets 13.3440 Oct. high, 13.4664 Sept. high
• Fall below 12.8946 pennant bottom suggests further losses toward 12.5830 Sept. low, 12.4315 July low

• EUR/USD requires +100k NFP miss to see significant move; median gains 0.38%, max. 1.87%; beats of 50k+ have seen median loss 0.41%, worst -1.85%
• On breach of 1.3711 2013 high, may rally toward ~1.425 Oct. 2011 high, 76.4% Fibonacci rebound of 2011-2012 decline
• Should NFP beat expectations, EUR/USD may fall back into 1.3450 to 1.37 range

• CAD also at risk today from Canada retail sales, Aug., est. 0.3% m/m overall, 0.2% ex-auto
• USD/CAD daily chart stabilizing around 1.03 after mid-Oct. test of 1.04
• Support 1.0277 Oct. 18 low, 1.0271 Sept. 24 low
• Resistance 1.0420 Oct. 10 high

• USD/BRL consolidating, testing oversold downtrend
• Resistance 2.1821 Sept. 19 low, 2.1916 Oct. 2 low, 2.2640 Sept. 27 high
• Support 2.1472 Oct. 18 low, 2.1384 Dec. 2012 high, 2.1175 June 14 low

• NOTE: TJ Marta is an FX strategist who writes for First Word. The observations he makes are his own.