USDJPY might be in for a reversal from its short-term selloff, as the pair is closing above the descending trend line visible on the hourly time frame. Price also seems to be forming a complex double bottom pattern and is closing above the 100 SMA.

A break above the neckline around the 135.00 handle could be enough to confirm that a rally is in the works. However, the 100 SMA is still below the 200 SMA to indicate that the path of least resistance is to the downside or that there’s a chance the selloff might resume.

Also, stochastic is indicating overbought conditions or exhaustion among buyers, so turning lower would confirm that sellers are taking over. RSI has a bit more room to climb before reaching the overbought region, so there could be some bullish pressure left in play.

The FOMC minutes led to a boost for the US dollar, as the Fed indicated scope for more rate hikes in the coming months. Fed head Powell even hinted that they’re not looking to cut borrowing costs anytime soon.

The upcoming NFP release might underscore the Fed’s hawkish view, as leading indicators are pointing to an upside surprise. Analysts are expecting to see a slowdown to 200K in hiring for December versus the previous month’s 263K gain.

However, the employment component of the ISM manufacturing PMI, the JOLTS job openings figure, and the ADP non-farm employment change report all came in better than expected. This could mean another strong showing for the official jobs report, confirming that the Fed has room to keep tightening monetary policy in the near-term.

Meanwhile, the BOJ has announced unscheduled bond-buying operations earlier this week, reminding traders that economic issues are very much present in Japan.