- Bearish market sentiment triggers a flight into safe haven assets, boosting the yen.
- The 10-year yield clings to the 1.50% threshold.
- The reading of the change in US ADP employment was better than expected, increasing the prospects for a gradual reduction of the bonds.
The USD/JPY It is declining from two-day highs, down 0.20%, trading at 111.24 during the New York session at the time of writing.
Market sentiment is pessimistic, sparked by rising energy prices, increasing prospects for high inflation, as seen by upward pressure on bond yields around the world. Higher returns do their part, hurting the company’s earnings, spurring sell-offs in the US equity markets, with leading stock indices shedding 0.14% to 1.50%.
The 10-year US Treasury yield is down just two basis points, approaching the 1.50% threshold, while the dollar is up 0.38%, currently at 94.36, without pushing the USD / JPY, which generally follows the yield of the US Treasury bond.
ADP job change in the US exceeded expectations
On the US economic agenda, the ADP Employment Change for September rises to 568,000, better than the 428,000 predicted by analysts. According to Nela Richardson, ADP’s chief economist, the labor market recovery is progressing despite a slowdown from the 748,000 work pace in the second quarter. In addition, he added that the labor shortage should disappear as health conditions linked to the COVID-19 variant improve.
That said, the report is good news for Federal Reserve Chairman Jerome Powell on the prospects for QE reduction early next year. However, on Thursday, initial jobless claims would provide additional clues to the attractive ADP report, in anticipation of non-farm payrolls, to be released on Friday.
USD / JPY Price Forecast: Technical Outlook
On the daily chart, USD / JPY broke below 111.50, leaving that level as the first resistance for the pair. However, the daily moving averages (DMA), still below the pair’s price, support the bullish bias.
For buyers to resume the attack at 112.00 and above, they would need a daily close above 111.50. in case of that result, the next supply zone would be 112.00.
On the other hand, the first support level is 111.00. If the USD / JPY sellers want to regain control, they need a daily close below 111.00. Once achieved, the next demand zones would be the September 8 high at 110.42, followed by 110.00
The Relative Strength Index (RSI) is at 58, slightly flat, suggesting that the pair is consolidating before resuming the uptrend.
ADDITIONAL LEVELS
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