- Positive developments surrounding the main risk events join sluggish data at home.
- US employment report and further reports on qualitative catalysts will be important to watch.
USD/JPY trades near the highest level in three weeks, 111.80, during initial Tokyo open on Friday. The pair rose near to 20 pips as news that the US and Chinese leaders laud trade negotiations joined hands with weaker than anticipated economic statistics by Japan. In addition to risk events, investors will closely watch March month employment details from the US for fresh impulse.
Not only the US lawmakers’ claim that they are moving well on the trade deal with China and expect the results soon, but Chinese policymakers including President Xi Jinping have also recently come forward to convey their optimism towards the end to bitter tariff war.
Such developments were taken very positively by USD/JPY traders when domestic data posted sluggish details. February month overall household spending (YoY) lagged behind 2.1% market consensus and 2.0% prior to 1.7% whereas labor cash earnings also dropped to -0.8% versus +0.8% forecast and downwardly revised -0.6% earlier print.
10-year treasury yields for the US notes are around 2.0 pips positive to 2.53%.
Japan’s February month leading economic index could gain immediate attention of traders. The sentiment index could increase to 97.3 from 95.9.
Elsewhere, March month employment numbers for the US are likely to recover after February month’s disappointing numbers. The headline non-farm payrolls (NFP) might rise to 180K from 20K while unemployment rate and average hourly earnings could remain unchanged at 3.4% and 3.8% respectively.
Investors might also have an eye over further news reports conveying developments surrounding the risk events like the US-China trade deal and Brexit. Both the events are presently offering positive support to market sentiment.
USD/JPY Technical Analysis
Successful break of 200-day simple moving average (SMA) enables the USD/JPY pair to aim for 112.15/20 resistance-region with 111.90 being an immediate upside barrier. If at all bulls dominate past-112.20, 112.90 and 113.30 could become their favorites.
Meanwhile, 200-day SMA level of 111.50 and 100-day SMA level of 111.00 can act as immediate support for the pair, a break of which can recall 50-day SMA level of 110.70 ahead of dragging the quote to 109.80 support.
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