USD / JPY clings to modest daily gains below 110.00 on a rocking day

• USD / JPY is rising modestly at the beginning of the week.
• The US bond market is closed due to the Labor Day holiday.
• The US dollar index remains in positive territory after Friday’s slide.

The pair USD/JPY turned south on Friday and ended up closing the week little changed below 110.00. With the dollar gathering some strength on Monday, the pair rose modestly and was last seen posting small daily gains at 109.83.

The US August jobs report on Friday showed nonfarm payrolls increased by 235,000 in August. This reading disappointed the market expectation of 750,000 by a wide margin and caused the USD to weaken against its rivals. The US Dollar Index (DXY) closed the fourth trading day in negative territory and hit its lowest level since early August at 91.94.

However, the DXY managed to make a correction in the absence of significant fundamental developments on Monday and was last seen a 0.15% rise to 92.25.

However, USD / JPY is expected to move sideways for the remainder of the day due to the fact that the US financial markets will be closed on the Labor Day holiday.

Short-term outlook for USD / JPY

UOB Group analysts believe that USD / JPY will remain in a consolidation phase in the short term.

“The downward pressure appears to have eased and the USD is unlikely to weaken further. For today, the USD is likely to consolidate and trade within a range of 109.55 / 110.00,” analysts said. “The USD is still consolidating and could continue to trade within a 109.30 / 110.55 range for now.”

Technical levels