USD/JPY rallies to levels near 110.00 fuelled by bright NFP data
- USD/JPY breaks through multi-month highs to hit levels right below 110.00
- The dollar rallies following an unexpected increase on May’s payrolls.
- US employment data boosts hopes of a V-shaped recovery on the second half of the year.
The greenback has broken higher against the Japanese yen, following the unexpected increase on US Non-Farm Payrolls, to reach 2, 1/2 – month highs at 109.85. The pair is on track to a 2% advance this week, following a four-day rally from the mid-range of 107.00.
US dollar appreciates after upbeat US payrolls
The market has welcomed the unexpected increase on May’s non-farm payrolls data boosting demand for the US dollar. The Labor Department has reported an increase of 2.509 million jobs, against market expectations of an 8 million decline. Last month’s increase follows a record drop of 20.687 million in April.
Likewise, the unemployment rate has dropped to 13.3% in May from 14.7% in April. May’s employment report has boosted risk sentiment, confirming that the worst of the coronavirus-induced global downturn has been left behind and fanning hopes of a v-shaped recovery on the second half of the year.
USD/JPY testing resistance at the 100 and 200 weekly MAs
The daily and hourly charts show the pair moving into overbought territory after having rallied for four consecutive days, which suggests the possibility of a downward correction. The pair is now right at the cross point of the 100 and 200-week moving averages, around 10960/80. Above here, next resistance lies at 110.20 (Jan 20 high) and then probably at 110.67 (21 May 2019 high).
On the downside, support levels are 109.30 (April 6 high), the 100-day SMA , at 108.35 and 108.40 (June 1 low).