USD/JPY Forecast: Waiting for US employment data

Valeria Bednarik FXStreet

USD/JPY Current price: 109.74

Financial markets depending on US inflation expectations and Fed speakers.
The focus is on US employment data ahead of the Nonfarm Payrolls report.
USD/JPY holds on to higher ground but lacks directional momentum.

The USD/JPY pair keeps seesawing between gains and losses, up this Thursday but still below the 110.00 mark. Market participants are in a cautious mood, waiting for US employment-related data ahead of the US Nonfarm Payrolls report to be out on Friday.

The market’s sentiment fluctuates accordingly to the chances of tapering in the US. Higher inflation has spurred speculation that the Federal Reserve will have to tighten its monetary policy ahead of planned. Policymakers have poured cold water on the matter, but some recently indicated that they are open to kick-start discussing trimming bond-buying.

European indexes are down, and US Treasury yields up, reflecting increased concerns. On the data front, Japan published the Jibun Bank Services PMI, which printed at 46.5, worse than the previous 49.5. The US will publish Initial Jobless Claims for the week ended May 28, foreseen at 395K, and the ADP survey on private jobs creation, expected at 650K. Later into the session, the country will release the official ISM Services PMI, foreseen at 63 from 62.7 previously.

USD/JPY short-term technical outlook

From a technical point of view, the USD/JPY pair is neutral-to-bullish. The 4-hour chart shows that it is developing above all of its moving averages, with the 20 SMA directionless around 109.60. Technical indicators hold above their midlines but without directional strength. Further gains are possible on a break above 110.10, the immediate resistance level.

Support levels: 109.60 109.20 108.85

Resistance levels: 110.10 110.45 110.80

View Live Chart for the USD/JPY

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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