The USD/JPY pair struggled to build on its intraday rebound from the 107.00 handle and was now seen oscillating in a range just below mid-107.00s, over 1-month tops. The pair failed to capitalize on the Asian session uptick and was now being capped by bearish trading sentiment around European equity markets, which underpinned the Japanese Yen's safe-haven appeal. The risk-off mood, further reinforced by the ongoing slide in the US Treasury bond yields, partly offset a strong follow-through US Dollar buying interest and was seen as one of the key factors keeping a lid on any additional up-move. Heading into today's key event risk - the release of US monthly jobs data, investors' reluctance to place any aggressive bets further collaborated to the pair's range-bound/subdued price action during the early European session. Apart from the keenly watched NFP report, the Fed Chair Jerome Powell's scheduled speech would be scrutinized for clues over the central bank's near-term monetary policy outlook and might also provide some meaningful impetus on the last trading day of the week.
The US dollar initially fell against the Japanese yen during trading this past week, as the jobs number came out on Friday. However, we remain within the trading range that we had been in, so I think it’s going to be a “buy the dips” market.
The USDJPY rallies to the 55 day EMA around the 107.00 level, but it loses its bullish momentum at that zone. Now the pair is trying to correct to the downside, where the 106.00 level may act as its next support. To the upside, the USDJPY would have to break above the 108.00 level in order to reverse its trend completely to the upside.
The US dollar recorded a modest decline against the Japanese yen on Monday. The session started at 106.93 and the dollar lost only 18 pips. The recent upward movement is impetuous but USD/JPY continues to find support from the 20-year moving average. Levels at 107.70 remain the primary objective.
The dollar/yen continued its bullish momentum last week, breaking through the downward channel. This fact should end the bears' phase and turn short-term bullish signals with the closest target seen in the 108.00-108.50 area. The first support is 106.50. A clear breakthrough and daily closure below this level may cause further downward pressure to test 106.00 or below. Basically, I remain neutral.
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