Prior to US data, USD/JPY surges to the 140.00 region due to widespread USD strength

FUNDAMENTAL OVERVIEW

• On Thursday, USD/JPY regains momentum and ends a three-day losing skid.
• A positive increase in US bond yields strengthens the dollar and gives the pair support.
• The main could be capped by decreased bets on additional Fed rate hikes and intervention warnings.

The USD/JPY pair makes a strong recovery from Thursday’s one-week low of 139.00, or below, and maintains its momentum into the early hours of the European day. The previous hour has seen spot prices move back up towards the key 140.00 level, breaking a three-day losing streak and stopping this week’s retracement decline from the 141.00 zone, or the YTD peak.

Following the overnight small fall from its highest level since mid-March, the US Dollar (USD) draws new buyers and ends up being a crucial element in helping the USD/JPY pair restore bullish momentum. The rise in the US dollar may be linked to a decent increase in US Treasury bond yields, which has caused the US-Japan rate difference to expand. This is thus thought to be putting pressure on the Japanese Yen (JPY) and giving the major a further boost.

Nevertheless, dwindling chances of a further rate hike by the Federal Reserve (Fed) could prevent USD bulls from making new wagers and limit the USD/JPY pair. In fact, Fed Governor Philip Jefferson stated on Wednesday that delaying rate increases at the upcoming FOMC meeting would give the committee time to review fresh data before deciding how much further tightening to implement. Patrick Harker, president of the Philadelphia Fed, supported halting at the following meeting in addition to this.

Therefore, it will be wise to hold off on creating new bullish wagers on the USD/JPY pair and positioning for any further appreciating rise until there has been strong follow-through buying. The release of the ADP data on private-sector employment, the customary Weekly Initial Jobless Claims, and the ISM Manufacturing PMI are the next items on the US economic docket that market investors will be watching.

USD/JPY TECHNICAL ANALYSIS DAILY CHART:

Technical Overview

USD/JPY is trading in up channel.

USD/JPY is currently trading above 20&50 SMA.

RSI is in buying zone which suggests bullishness and Stochastic is suggesting a downtrend.

USD/JPY resistance is at 139.635 & its immediate support level is 138.928

HOW TO TRADE USD/JPY

The price of the USD/JPY is currently retracing somewhat after consistently going upward; if this resistance zone is broken, additional upward movement is expected. The price of the currency is currently trading in an up channel and has begun to follow a higher high structure.

TRADE SUGGESTION- BUY AT 139.560, TAKE PROFIT AT 140.898, SL AT 138.736