USDJPY is inside of last months highs and lows as NFP looms
|- USDJPY is attempting to run higher but the Bank of Japan headwinds and Nonfarm Payrolls loom.
- The US dollar has remained in the driving seat following the Fed.
USDJPY has been creeping in on the US session and London highs, trading between 147.97 and 148.29 on Friday so far. The pair sticks to the front side of the micro trendline as illustrated below with no signs of a break in structure, so far, ahead of the key event of the day that will come in the US session.
There is always the threat of the Bank of Japan, BoJ, and Ministry of Finance, MoF, although, the Nonfarm Payrolls is a fixed schedule that traders are looking ahead to ahead of next week's inflation data. The recent volatility, stemming from the US Federal Reserve event on Wednesday has been a driver for forex over the recent sessions where the US dollar strengthened after the Fed's hawkish comments. Global equities fell while US Treasury yields rose on Thursday as a consequence while investors weighed the hawkish commentary with the prospects of further interest rate hikes targeted at reining in inflation. This would usually be bullish for the prior safe-haven yen, but the divergence between the Fed and BoJ has stripped the currency of such allure.
Powell said during a press conference that the "ultimate level" of interest rates is likely higher than previously estimated, and the central bank still has "some ways to go." This sent markets off a cliff, seeing the likes of the S&P 500 drop almost 100 points and the Dow by more than 500 points as rattled investors ran for cover while the two-year note climbed toward 5%. The yield on the benchmark 10-year note rose to 4.22%.
Meanwhile, the yen remains in demand vs the crosses and this could keep the threat of immediate intervention at bay. Japanese officials may decide to wait for the forthcoming data events as a guide to how strong the US dollar might get over the course of the weeks leading into the next Fed meeting in December.
USDJPY technical analysis
The price is headed into what would be expected to be a firm resistance area. The structure to the downside is located at 147.97, 147.61 and 147.28. While above these levels and on the front side of the micro trendline, the bias remains to the upside, however, with 149.71 eyed. Meanwhile, the pair is inside of last month's highs and lows with little bias either way at this juncture.
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