USD/JPY climbs on strong USD after last week’s US Nonfarm Payrolls data

The US jobs market begins to cool down, but Average Hourly Earnings flash inflation risks tilted upside.
BoJ retains a dovish yield curve policy, with the majority advocating for the preservation of the existing monetary policy.
US CPI data eyes on August 10, estimates lie at 3% YoY, while the core is expected to drop to 4.7% YoY.

Christian Borjon Valencia FXStreet

USD/JPY advanced sharply during Monday’s North American session as the greenback strengthened amid a risk-on impulse following last week’s mixed US jobs data. Hawkish comments over the weekend by a Fed official sponsored the greenback advance. The USD/JPY is trading at 142.47, above its opening price by 0.55%.

Hawkish remarks from Fed official Michelle Bowman fuel USD strength, while the Bank of Japan maintains a dovish stance

Wall Street is trading with solid gains, portraying an upbeat mood, while US Treasury bond yields advance. Market participants’ reaction to last Friday’s US Nonfarm Payrolls reports missing estimates of 200K, coming at 187K, triggered a sell-off of the greenback, which has trimmed some of its losses, registering modest gains of 0.13%, as shown by the US Dollar Index (DXY).

Although the US jobs market showed signs of easing, inflationary pressures are still present, with Average Hourly Earnings remaining at 4.4% YoY, exceeding the consensus of 4.2%. That could spark another rise in inflation in the United States (US), which is expected to deliver its July report on August 10.

Estimates for the Consumer Price Index (CPI) in the United States (US) depict inflation falling to 3% from 3.3% in June, while Core CPI, which strips out volatile items, is estimated to decelerate to 4.7% YoY, from 4.8% in June.

The USD/JPY advancement was sponsored by hawkish comments by Michelle Bowman, who said the Fed would likely need to lift rates further to bring down inflation. On the dovish side of the spectrum, the New York Fed President John Williams noted that rate cuts could begin in early 2024, depending on economic data and if the inflation trend continued to edge lower.

Also, US Treasury bond yields, particularly the 10-year benchmark note, rise five basis points (bps) to 4.090%, a tailwind for the USD/JPY. Meanwhile, the DXY, a measure of the US Dollar’s value against six currencies, gains 0.12% and exchanges hands at 102.130.

The Bank of Japan (BoJ) Summary of Opinions confirms a dovish yield curve tweak, suggesting that further Japanese Yen (JPY) is expected in the near term. Most officials stressed the need to maintain the current monetary policy in place. At the same time, one member suggested that inflation would remain at 2% “in a sustainable and stable manner seems to have clearly come in sight.”

USD/JPY Technical Levels

USD/JPY

Overview
Today last price	142.52
Today Daily Change	0.76
Today Daily Change %	0.54
Today daily open	141.76

Trends
Daily SMA20	140.63
Daily SMA50	141.28
Daily SMA100	137.88
Daily SMA200	136.58

Levels
Previous Daily High	142.93
Previous Daily Low	141.55
Previous Weekly High	143.89
Previous Weekly Low	140.69
Previous Monthly High	144.91
Previous Monthly Low	137.24
Daily Fibonacci 38.2%	142.08
Daily Fibonacci 61.8%	142.4
Daily Pivot Point S1	141.23
Daily Pivot Point S2	140.7
Daily Pivot Point S3	139.86
Daily Pivot Point R1	142.6
Daily Pivot Point R2	143.45
Daily Pivot Point R3	143.98

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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