The low earlier in Asia touched 150.95 before buyers stepped back in and we’re now trading 100 pips above that. It’s a bit of a tricky one for the pair as the dollar has hardly showed much convincing appetite against the rest of the major currencies bloc. With eyes on the US jobs report later, yen pairs are the only notable movers in European trading thus far.
USD/JPY daily chart
The rebound so far is fairly modest but as seen from the chart above, it comes after two struggling days for the pair. In particular, the drop yesterday took out the 100 (red line) and 200-day (blue line) moving averages. The key technical region for that is now seen at 152.60-72. As such, sellers will stay in control barring a break back above that technical zone.
Besides that, and perhaps the more important factor here, is that the bond market also needs to play ball for USD/JPY to sustain the latest bounce.
10-year Treasury yields are flattish at 4.438% and that to me does not ascribe much confidence to the bounce we’re seeing.
The US jobs report is the next key risk event and unless it acts as a trigger for yields and the dollar to recover, the technical developments in USD/JPY this week are suggestive of a move lower in the short-term at least.
But again, we’ll see what the non-farm payrolls data has to say. As mentioned earlier, it’s not so much so about the impact on the Fed outlook now. It’s all about putting the cherry on top of the risk recovery we’ve seen this week.