- USD/JPY rallies around 150 pips in reaction to the mostly upbeat US employment report details.
- The US economy added 517K new jobs in January and the jobless rate dropped to 3.4%.
- A weaker risk tone, hawkish BoJ expectations could lend support to the JPY and cap gains.
The USD/JPY pair catches some bids during the early North American session and spikes to a fresh daily top around the 129.80 region in reaction to the mostly upbeat US employment report details.
In fact, the headline NFP showed that the US economy added 517K jobs in January, surpassing even the most optimistic estimates. Adding to this, the unemployment rate unexpectedly edged down to 3.4% during the reported month from 3.5% in December. The data further points to the underlying strength in the US labor market, which should allow the Fed to stick to its hawkish stance. This, in turn, provides a strong boost to the US Dollar and is seen as a key factor behind the USD/JPY pair's sharp rally of around 150 pips in the last hour.
At the same time, a combination of factors lends some support to the Japanese Yen (JPY) and fails to assist spot prices to build on the momentum beyond the 200-hour SMA. Diminishing odds for an imminent pause o the Fed's rate-hiking cycle take a toll on the global risk sentiment, which is evident from a weaker tone around the equity markets. This, along with speculations that high inflation may invite a more hawkish stance from the Bank of Japan (BoJ) later this year, underpins the safe-haven JPY and keeps a lid on any further gains for the USD/JPY pair.
Hence, it will be prudent to wait for strong follow-through buying before positioning for an extension of the intraday positive move. Nevertheless, the USD/JPY pair, for now, seems to have erased its modest weekly losses and remains at the mercy of the USD price dynamics.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD recovers above 0.6750 after Australian jobs data
AUD/USD picks up a late bid and recovers above 0.6750 in Asian trading on Thursday, following the release of mixed Australian employment data. The extended post-Fed US Dollar recovery, amid a cautious market mood, could limit the pair's upside ahead of US data.
USD.JPY jumps toward 144.00 on the road to recovery
USD/JPY gains traction and approaches 144.00 in Thursday's Asian session. The uptick of the pair is bolstered by the impressive US Dollar recovery. Investors shift their attention to the US data and the Bank of Japan interest rate decision on Friday.
Gold price remains on the defensive amid the post-FOMC USD recovery from YTD low
Gold price struggles to lure buyers despite the Fed’s jumbo interest rate cut on Wednesday. A further recovery in the US bond yields underpins the USD and caps the non-yielding metal. Concerns about an economic slowdown, along with geopolitical risks, help limit the downside.
Ethereum attempts recovery following first rate cut in four years
Ethereum is trading above $2,330 on Wednesday as the market is recovering following the Federal Reserve's decision to cut interest rates by 50 basis points. Meanwhile, Ethereum exchange-traded funds recorded $15.1 million in outflows.
Australian Unemployment Rate expected to hold steady at 4.2% in August
The Australian Bureau of Statistics will release the monthly employment report at 1:30 GMT on Thursday. The country is expected to have added 25K new positions in August, while the Unemployment Rate is foreseen to remain steady at 4.2%.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.