- USD/JPY regained positive traction on Friday and broke three consecutive days of losing streak.
- Risk appetite, Fed and BoJ policy divergence weighed on JPY and continued to support lending.
- Rising US bond yields and mostly upbeat US NFP data supported the USD and favor bullish traders.
The pair USD/JPY maintained its intraday gains, up from 122.50 earlier in the American session and had a rather subdued reaction to the US monthly employment report.
The NFP headline showed the US economy added 431,000 jobs in March versus an expected 490,000, though the disappointment was offset by an upward revision to the previous month’s reading of 750,000. Additional details revealed that the unemployment rate fell to 3.6% from 3.8% in February and the median hourly wage grew 0.4% from 0.1% previously.
The data reaffirmed market bets that the Fed would raise interest rates by 100 bps over the next two meetings to combat stubbornly high inflation. This was reinforced by high yields on US Treasuries, which supported the US dollar. On the other hand, the Japanese yen was weighed down by the Bank of Japan’s commitment to aggressively defend its 0.25% yield cap.
This coupled with a generally positive tone in equity markets dented the safe haven demand for the JPY and acted as a tailwind for the USD/JPY pair. This marked the first day of positive movement in the previous four and helped the pair stop its pullback from levels above the psychological 125.00 mark, or the highest level since August 2015 touched earlier this week.
With Friday’s key data out of the way, market focus returns to new developments surrounding the Russia-Ukraine saga. Incoming headlines will influence broader market risk sentiment. This coupled with US bond yields and US dollar price action should provide some lift to the USD/JPY pair and allow traders to take advantage of some short-term opportunities.
Technical levels
Source: Fx Street
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