We know that it is an important week in the forex market when even on a day like today when the global economic calendar contains virtually no market moving releases outside of last night’s RBA decision, currencies are seeing big moves. USD/JPY rose above 100 for the first time in almost a month while the EUR/USD tested 1.30 for the fifth trading day in a row.

In fact, the dollar is trading higher against all of the major currencies this morning and the move has nothing to do with factory orders. The rally in the greenback started hours before this secondary report was released but the 2.1% increase helped to keep the dollar bid. After the Federal Reserve lowered its unemployment rate forecasts, investors have been slowly buying dollars ahead of Friday’s labor market numbers. A drop in the unemployment rate would confirm that the U.S. economy is moving in the right direction and the Fed is on course to reduce asset purchases in September. USD/JPY had been slowly trickling higher for the past 2 weeks and when it touched 100, it triggered a number of stop and limit orders that shot the currency pair up to 100.30. There’s short term resistance in USD/JPY at 100.45, the June 4th and 5th high but beyond that, the next level of resistance is not until 102.50. In addition to expectations for Friday’s payrolls report, USD/JPY is also being supported by the continued recovery in the Nikkei.

Yet USD/JPY was not the only currency that reached key levels this morning. The Canadian dollar also dropped to its lowest level against the U.S. dollar in more than a year and the euro is testing 1.30. If the currency pair finally manages to break this key support level in a meaningful way, then the next stop could be 1.2840. We originally expected this break to occur on the back of Thursday’s ECB meeting but at this stage, it appears that investors are pre-positioning for dovish comments from the central bank.