USD / JPY accelerates its recovery to reach session highs at 111.50

• The dollar bounces from 110.80 to approach a multi-month high at 112.05.
• The USD appreciates moderately with all eyes on Friday’s NFP data.
• USD / JPY remains biased to the upside as long as it is above 110.83 / 75 – Credit Suisse.

The USD bounced off its main rivals on Tuesday, fueled by a rally in U.S. Treasury yields amid moderately positive market sentiment. USD / JPY has extended its bounce from lows of 110.80 on Monday to session highs of 111.55 so far.

The US dollar rebounds with all eyes on US labor data.

The dollar ignored the weakness of the previous two days to reassert itself and approach the multi-month highs reached last week. The US dollar index rose on Tuesday after a three-day retracement, rebounding from the lows of 93.65 to return to the 94.00 area, approaching a year-long high at 94.50. The market, however, remains cautious ahead of the release of Friday’s payroll report, which is expected to clarify the next step for the Federal Reserve.

On the macroeconomic front, the US trade deficit rose to an all-time high in August, with a deficit of $ 73.3 billion. The market had anticipated a smoother rally to $ 70.5 billion, after a trade gap of $ 70.3 billion in July, revised up from the previously estimated $ 70.1 billion.

Beyond that, services activity data accelerated in September, with the US ISM non-manufacturing PMI rising to 61.9 from 61.7 in the previous month. The improvement in the services sector suggests a certain normalization of economic activity, although the current shortage of raw materials is pushing prices higher and weighing on the employment component.

USD / JPY: Above 110.83 / 73, Pair Likely to Retest 112.23 / 40 – Credit Suisse

From a technical perspective, Credit Suisse’s currency analysis team sees the pair biased higher, while support at 110.83 / 73 remains in place: “We are looking for a 13-day exponential average and price support at 110.83 / 73. to ideally hold and for a break above 111.31 to be seen for strength again at 111.80 / 82 ahead of 112.08 and then a retest of 112.23 / 40. Our bias remains to look for an eventual break higher to see a complete important and large base. “

Technical levels to observe