USD/JPY Analysis: further gains depending on NFP’s outcome

USD/JPY Current Price: 106.97

Japan to release the preliminary estimate of July Leading Index.
Better perception of risk coupled with robust US macroeconomic data.
USD/JPY has its next relevant resistance at 107.45, a Fibonacci level.

The upbeat market mood helped the USD/JPY pair reaching 107.22, its highest in five weeks, with the pair now heading into the Asian opening hovering just below the 107.00 level. News confirming that the US and China will resume trade talks early October boosted the market’s sentiment at the beginning of the day, while the American currency accelerated its recovery following the release of a better-than-anticipated ISM Non-Manufacturing PMI. The market dumped safe-haven assets, with gold falling alongside the yen and Wall Street posting solid gains. Government debt yields recovered with the yield on the US 10-year Treasury note surging to 1.59% to settle at around 1.56%.

Japan will release the preliminary estimate of its July Leading Index this Friday, alongside the less relevant preliminary Coincident Index. The pair could pay little attention to Asian signals, and wait for US employment data before deciding the next directional move.

USD/JPY short-term technical outlook

The USD/JPY pair is trading a couple of pips above the 50% retracement of the August decline, with the next Fibonacci resistance at 107.45. In the 4 hours chart, the pair seems poised to extend its advance, as it settled above all of its moving averages for the first time in over a month, although the moving averages continue lacking directional strength. Technical indicators, in the meantime, remain at overbought levels, losing their bullish strength but far from signaling upward exhaustion.

Support levels: 106.65 106.30 105.90

Resistance levels: 107.10 107.45 107.80

View Live Chart for the USD/JPY

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