USD/JPY steadily climbs back to 109.00 neighbourhood, fresh session tops
|- USD/JPY regained positive traction on Monday and recovered a major part of the post-NFP losses.
- The risk-on mood undermined the safe-haven JPY and remained supportive of the positive move.
- A pickup in the US Treasury bond yields eased the USD bearish pressure and remained supportive.
The USD/JPY pair edged higher through the first half of the trading action and was last seen hovering near daily tops, just below the 109.00 round-figure mark.
A combination of factors assisted the pair to regain positive traction on the first day of a new trading week and recover a major part of Friday's post-NFP losses to over one-week lows. The underlying bullish sentiment in the financial markets was seen as a key factor that undermined demand for the safe-haven Japanese yen. Apart from this, worries that the recent surge in COVID-19 cases could hinder Japan's fragile economic recovery further acted as a headwind for the JPY.
On the other hand, a goodish pickup in the US Treasury bond yields assisted the US dollar to stage a modest rebound from the lowest level since February 25. This was seen as another factor that assisted the USD/JPY pair to snap three consecutive days of the losing streak. The pair, for now, seems to have stalled its recent pullback from the 109.70 region, though any meaningful upside seems elusive amid expectations that the Fed will keep interest rates low for a longer period.
Friday’s disappointing US monthly jobs report reaffirmed dovish Fed expectations, which might hold bulls from placing aggressive bets and cap gains for the USD/JPY pair. The headline NFP showed that the US economy added only 266K jobs in April, far lower than consensus estimates pointing to a reading of nearly one million. Adding to this, the previous month's reading was also revised down to 770K from 916K and the unemployment rate unexpectedly edged higher to 6.1% from 6.0% in March.
Hence, it will be prudent to wait for some strong follow-through buying before positioning for any further appreciating move. This, in turn, suggests that any subsequent positive move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly amid absent relevant market moving economic releases.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.