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USD/JPY advances toward mid-114s on greenback strength

  • USD/JPY refreshes weekly highs and retreats ahead of 114.50.
  • US stocks turn positive after the negative start.
  • DXY approaches 95 as US data signals to a strengthening economy. 

The USD/JPY pair gained traction during the American trading hours and rose to its highest level since last Friday at 114.43. At the moment, the pair is trading at 114.33, adding 0.2% on the day.

DXY upsurge drives pair's price action

After the knee-jerk drop to 94.30 amid mixed employment report, the US Dollar Index reversed course and jumped to 94.92 as the other data from the U.S. showed that the non-manufacturing business sector continued to expand its activity, suggesting that the economic growth is preserving its momentum. 

Although the nonfarm employment growth missed the market estimate of 310K as it came in at 261K in October, the unemployment rate fell to its lowest level since 2000 at 4.1%. Furthermore, average hourly earnings didn't change on a monthly basis, bringing down the annual wage growth to 2.4%. Meanwhile, the non-manufacturing PMI released by the ISM rose to 60.1 in October, the best reading since the index's debut in 2008.

An improving market sentiment in the session seems to be providing an additional boost to the pair as well. After starting the day slightly lower, major equity indexes in the U.S. started to move toward new record highs. At the moment, the Dow Jones Industrial Average and the S&P 500 are both up 0.07% on the day. 

Technical outlook

The RSI indicator on the daily graph remains above the 50 mark, suggesting that the buyers are still in control. A decisive break above the critical 114.50 (Oct. 27/Jul. 11/May 11 high) resistance could open the door for more gains to 115 (psychological level) and 115.50 (Mar. 10 high). On the downside, supports could be seen at 113.60 (daily low), 113.20 (20-DMA) and 112.30 (Oct. 19 low).

Today's data from the US

  • US: Service sector business activity growth remains strong in October - Markit
  • US: Total nonfarm payroll employment rose by 261,000 in October
  • US: Goods and services deficit at $43.5 bln in Sep, up $0.7 bln from $42.8 bln in Aug
  • US: ISM non-manufacturing PMI rises to 60.1 in October from 59.8 in September

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