USD/JPY Forecast: Holding ground ahead of US employment figures

USD/JPY Current price: 109.15

• Japan´s April Jibun Bank Services PMI improved to 49.5 from 48.3 previously.
• The US is expected to have added roughly 1 million jobs in April.
• USD/JPY is technically neutral, needs to break above 109.70 to gain bullish strength.

The USD/JPY pair is stuck around the 109.10 price zone, paring losses amid a better market mood but on hold, ahead of the US Nonfarm Payrolls report. The greenback keeps losing ground against most major rivals, as stocks are firmly higher, backed by encouraging data released ahead of the event. At the same time, US Treasury yields remain depressed near weekly lows, with the yield on the benchmark 10-year note currently around 1.57%. Yields are seen as a measure of potential inflationary pressures, cooled this week by multiple Federal Reserve officials.

Japan published the April Jibun Bank Services PMI, which improved to 49.5 from 48.3 previously, and the Monetary Base for the same month increased by 24.3%. Regarding US employment, the country is expected to have added 978K new jobs in April, while the unemployment rate is foreseen contracting to 5.8% from the current 6%. Employment-related figures released ahead of the event suggest that the headline number could beat forecasts.

USD/JPY short-term technical outlook

The near-term picture for USD/JPY is neutral, as the pair has been trading in an 80 pips range ever since the week started. In the 4-hour chart, the pair is trading between directionless moving averages, with the 20 and 200 SMAs providing dynamic resistance in the 109.20/30 price zone. Technical indicators are directionless around their midlines. The pair needs to advance beyond 109.69, the weekly high, to gather bullish strength and extend its rally beyond the 110.00 price zone.

Support levels: 108.70 108.25 107.90

Resistance levels: 109.25 109.70 110.10  

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