- USD / JPY gained strong follow-up traction for the third consecutive session on Friday.
- The dollar received an additional boost after the release of the US jobs report.
- As US bond yields rose, a positive risk tone undermined the yen and remained supported.
The US dollar strengthened across the board in reaction to the successful NFP report and pushed the pair USD/JPY past the key psychological level of 110.00, or one-week highs in the past hour.
The pair caught some aggressive offers during the early American session after the latest monthly US jobs report showed the economy added 943,000 new jobs in July. The reading beat even the most optimistic estimates and was complemented by a sharp revision to the previous month’s reading to 938,000 from 850,000 previously reported.
Further details revealed that the US unemployment rate fell from 5.9% in June to 5.4% during the reported month, beating expectations of 5.7%. There was good news on the wage front as well, as median hourly earnings rose 4.0% year-on-year, marking a further step towards the Fed’s goal of making substantial progress in the labor market recovery.
However, the highly successful report validated market expectations that the Fed will start reducing its asset purchases sooner rather than later. This was evident by a strong rally in US Treasury yields. In fact, the benchmark 10-year US government bond yield jumped to 1.28% and further sustained the USD.
Apart from this, a generally positive tone in equity markets affected demand for the Japanese yen as a safe haven. This was seen as another factor that helped the USD / JPY pair prolong this week’s solid rebound from the lowest level since late May and gain strong follow-up traction for the third session in a row.
However, it remains to be seen if the bulls can capitalize on the move or opt to take some profits off the table. Concerns that the rapidly spreading Delta variant of the coronavirus could derail the global economic recovery could act as a headwind for the USD / JPY pair and limit any further gains, warranting caution before positioning. for more profit.
Technical levels
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