USD/JPY swings near 145.00 after US NFP numbers and will end Friday where it started

• The USD/JPY pair reached 146.00 in the pre-NFP phase before retreating.
• The Yen is set for another major bearish week, down 1% percentage against most major currencies.
• The Yen sell-off will dominate market themes as the Yen pairs rebalance recent losses.

The USD/JPY rebounded to a short-term high in the 146.00 area early on Friday, in the run-up to the release of US Non-Farm Payrolls, which beat market forecasts and sparked a US Dollar (USD) retreated against the Japanese Yen (JPY) as markets weighed the odds of Federal Reserve (Fed) rate cuts amid a still firm US labor market.

Average hourly earnings for the year ended December rose to 4.1% compared to 4.0% in November, beating the market forecast for a slight decline to 3.9%, and the NFP showed the U.S. added 216,000 jobs. net jobs to the economy in December, well above the market's expected impression of 170,000. The NFP figure for December was at its highest level in three months, although revisions can be expected in the coming months: the final figure for November was revised downwards from 199,000 and in October there was a second series of revisions that They reduced the total from 150,000 to 105,000 jobs.

With the U.S. labor market continuing to show more strength than investors expected, the odds of the Fed cutting interest rates sooner rather than later are declining, with money markets now pricing in a 60% chance of a cut. of rates in March, compared to 90% in December.

The Tokyo Consumer Price Index (CPI) is due to be released next week, and investors will be keeping a close eye on Japan's inflation numbers as markets continue to look for signs that the Bank of Japan (BOJ) will get out of the hole in which it is plunged by its excessively expansive monetary policy.

Tokyo's CPI last stood at 2.6% for the year ended December, the lowest level in 12 months, after headline inflation in Japan hit 4.4% in January 2023. Despite the rapid and steadily falling inflation, the Bank of Japan has taken a very opposite stance from most major central banks, and is overwhelmingly concerned that inflation is falling too quickly, too far below the target. 2% from the Bank of Japan, which fears that inflation will fall below its minimum target at some point in 2025.

Tokyo's core CPI (headline inflation minus fresh food prices) is forecast to fall from 2.3% to 2.1% for the year to December.

USD/JPY Technical Outlook

There was disarray on the USD/JPY intraday charts on Friday following the post-NFP crash, touching 146.00 and falling below 144.00 before closing the day close to where it started, near 144.50.

Steady selling of the Yen has led USD/JPY to rise through the first week of 2024, with the pair up just over 3% from the December low of 140.25.

This week, the USD/JPY pair closed in the green for three consecutive sessions and bounced off the top of the 200-day SMA, while technical indicators recover from oversold conditions. The pair is still down almost 5% from November highs near 151.90, and USD/JPY bulls will find an immediate technical top at the 50-day SMA falling through 147.00.

USD/JPY Hourly Chart

USD/JPY Daily Chart

USD/JPY technical levels