USD/JPY tumbles below 128.00 after the release of Japan’s Unemployment Rate at 2.6%

The USD/JPY pair has slipped to near 127.70 as the Statistics Bureau of Japan has reported the Unemployment Rate at 2.6%, lower than the forecast and prior print of 2.7%. A modest fall has been recorded in the asset after the release of the labor market data. The improvement in the labor market has underpinned the Japanese yen against the greenback. Also, the Jobs/Applicants ratio has landed a 1.22, in line with the market forecasts but a little higher than the prior print of 1.21%.

An extremely tight labor market in Japan has brought an intense sell-off in the counter. On a broader note, the Japanese yen is experiencing a bullish pullback after consistently drifting lower on ultra-loose monetary policy. The Bank of Japan (BOJ) is keeping a dovish stance on liquidity status as the economy has not yet reached its pre-pandemic levels. It won’t be wrong to say that profit-booking is dragging the asset lower; however, the long-term bullish stance is still intact.

On the dollar front, the US dollar index (DXY) is facing barricades while attempting a touch to 102.00. The DXY is facing the headwinds of a little extended upside as the momentum oscillators have turned extremely overbought on various timeframes. Higher expectations of a jumbo rate hike by the Federal Reserve (Fed) in its May monetary policy are continuously keeping the bulls in the driving seat. Meanwhile, the 10-year US Treasury yields have failed to reclaim 3% for the first time in the past three years.