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  • USD/JPY rose from 107.80  to 108.40, with highs above 108.60  on NFP.
  • In the 4 hours chart, USD/JPY surpassed a bearish 200 SMA for the first time since March.

USD/JPY is consolidated at 108.52, travelling in a tight range of 108.39 and 108.58. On Friday, USD/JPY rose from 107.80  to 108.40, with highs above 108.60 made following  the headline Nonfarm Payroll surprise which benefited the Dollar and US yields. The 10-year yield rallied to close +4.66% higher and stocks ended lower. The DXY rallied 0.47%, rallying in the 96.72/97.44 range.  In the data, however, the unemployment rate rose to 3.7% just 0.1% above May’s five-decade record and the labor force participation rate climbed to 62.9%, according to the Labor Department on Friday.  

There was slight disappointment from the lack of pick-up in annual average hourly wages (remained at 3.2%y/y), but overall the report was seen as strong as puts an interest rate cut from the Federal Reserve into question.  US 2-year treasury yields jumped from 1.75% to 1.88% in response to the report. Markets are now pricing 27bp of easing at the July meeting (from 32bp pre-jobs report), with a total of three cuts priced by mid-2020.  

Recent news  

Elsewhere,  BoJ governor Kuroda spoke  at the branch managers meeting:  BOJ’s Kuroda: Will maintain easing for as long as needed to hit stable 2% inflationThe  weekend headlines  have out  Iran and Turkey, the Fed and Trump  on the FX radar:

  • Iran which said it would breach its uranium enrichment cap. Trump: Iran better be careful after nuclear breach
  • In Turkey, where the president fired the central bank head for not reducing interest rates. The Turkish lira fell about -2.5% at this morning’s open:  Breaking: USD/TRY spikes 15 big figures on sacking of the Central Bank Governor
  • President Trump said that the Fed “doesn’t have a clue” and that the US’s “most difficult problem…is the Federal Reserve.”:    US Pres. Trump: Our most difficult problem is not our competitors, it is Fed

USD/JPY levels

Valeria Bednarik, the Chief Analyst, at FXStreet explained that the daily chart for the USD/JPY pair shows that it has been unable to surpass the 108.60/70 price zone since breaking lower at the end of May, with multiple intraday highs in the region:

“Friday’s advance helped the pair to settle above a flat 20 DMA, although the 100 and 200 DMA remain well above the current level, with modest downward slopes. Technical indicators recovered but are currently in neutral territory, falling short of confirming additional gains ahead. In the 4 hours chart, the pair surpassed a bearish 200 SMA for the first time since March, but retreat to settle around it. Technical indicators began easing after reaching overbought territory, but so far it’s unclear whether the pair will set a top. To confirm further gains, the pair would need to advance beyond 108.80, while the risk will lean to the downside if it falls below 108.00.”