USD/JPY: Buyers and sellers jostle below 108.00 early on NFP day

USD/JPY bounces off three-day low to 107.49 during the initial hour of Tokyo open on Thursday. Even so, the pair portrays no major moves considering Wednesday’s heavy losses from the monthly top. It’s worth mentioning that the quote snapped five-day winning streak while reversing from 100-day SMA during the previous day.

The US dollar bears seem to catch a break after marking losses for three consecutive days to print the weekly low around 97.00. That said, the US dollar index (DXY), the gauge of the greenback versus the major currencies, takes rounds to 97.19 by the press time.

While the upbeat outcome of the global PMIs and signals for further stimulus might have favored the optimists the previous day. The recent spike in the US coronavirus (COVID-19) figures and escalating tension between America and Beijing seems to offer the latest challenges to the market’s risk-tone sentiment. Recently, Reuters suggested that US daily virus cases rose more than 48,000 on Wednesday, registering the highest increase since the pandemic started. On the other hand, China announced stipulations for the US media working on their land after the Trump administration pushed for sanctions due to the passage of Hong Kong security law. Additionally questioning the market’s earlier risk-on mood, also supporting the greenback’s safe-haven demand, could be the traders’ skepticism ahead of the US employment figures for June.

It should be noted that Japan’s June month Monetary Base expanded from 3.9% prior to 6.0% but Foreign Investment in Japan stocks for the period ending June 26 slipped from ¥-421.9 B to ¥-494.4 B. Further, Foreign Bond Investment also recede from ¥1547.5 B to ¥174.6 B during the mentioned period.

Amid all these catalysts, the S&P 500 Futures drop 0.20% to 3,097 whereas Japan’s Nikkei seesaws around 22,120 with no major change daily. Further, the US 10-year Treasury yields also fade the previous two-day winning streak while taking rounds to 0.674% by the press time.

Looking forward, market players will keep eyes on the US employment data for immediate direction. Although forecasts suggest further recoveries in the headline Nonfarm Payrolls (NFP) and Unemployment Rate, analysts remain cautious considering the impact of the second wave of the virus.

Read: US Non-Farm Payrolls June Preview: The delicate art of prediction

Technical analysis

50-day SMA, at 107.38 now, questions the pair’s U-turn from 100-day SMA, currently around 107.90. Though, MACD teases bulls on the daily chart, which in turn increases the odds to witness another attempt in breaking the key SMA resistance.