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USD/JPY orbiting around 108.00 ahead of NFP, Powell

  • The pair is up for another session and flirts with the 108.00 handle.
  • US Non-farm Payrolls, Chief Powell coming up next.
  • US 10-year yields rebound to the 2.60% area.

The Japanese Yen is shedding part of its last strong gains vs. the greenback and is now allowing USD/JPY to extend the bounce to levels beyond 108.00 the figure.

USD/JPY now looks to US data, Powell

Spot managed to regain traction after Wednesday’s ‘flash crash’ forced it to briefly drop and test the 105.00 neighbourhood, area last visited in March 2018.

The persistent decline in yields of the key US 10-year note has been also collaborating with the sharp leg lower in spot, also fuelled by markets’ perception that a global slowdown could be in the offing.

Data wise today, the greenback is expected to remain under pressure in light of firstly, the publication of December’s Payrolls figures (178K expected) and secondly, the speech by Fed’s J.Powell at the annual meeting of the American Economic Association.

What to look for around JPY

The re-emergence of the risk-off trade based on escalating fears of a probable slowdown in the global economy is seen supporting the demand of the safe haven JPY in the near to medium term. Furthermore, trade war jitters and any re-consideration of the Fed’s rate path and/or US economic growth will likely hurt the buck and sentiment and should also reinforce the case for a stronger Yen.

USD/JPY levels to consider

As of writing the pair is gaining 0.36% at 108.03 and a breakout of 108.44 (high Jan.4) would open the door to 109.60 (10-day SMA) and finally 111.10 (200-day SMA). On the downside, immediate support aligns at 106.75 (low Jan.3) followed by 105.00 (‘flash crash’ Jan.2) and then 104.56 (2018 low Mar.26).

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