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  • USD/JPY is moving higher in the Tokyo open, making fresh highs following a strong recovery in NY trade.  
  • The price is stuck between the 100 and 200 SMA,= on the 4-hr sticks.

USD/JPY is moving higher in the Tokyo open as the risk sentiment follows on the coattails of a better bid session in NY that recovered from the European negatively where trade war concern weighed on investor sentiment.  

Wall Street was a catalyst for the rebound in USD/JPY, where otherwise, the yen was catching a safe haven bid as investors fear retaliation fro the Chinses over the prosed ramping up of tariffs on Chinese imports by the Trump administration. USD/JPY had been as low as 111.31 at one stage in late European trade where stops had been cited – marrying up with the 1st August lows at 111.47.  

Also, Apple’s strong earnings report saw technology stocks push key US indices higher, as Apple became the first US company to hit a market value of one trillion dollars – even if it was short-lived, as analysts at ANZ noted, aiding the recovery in USD/JPY to 111.71. From here, the sky is the limit although markets need to consider nonfarm payrolls first, which are expected to be strong following an uptick in the manufacturing sector’s employment numbers and the impressive ADP report.  

Analysts at Nomura offered a snapshot preview of the nonfarm payrolls:

We expect a strong payroll gain of 195k in July (Consensus: 192k), consistent with an economy growing well-above potential, and a healthy 0.22% increase in average hourly earnings (AHE), leaving the 12-month rate unchanged at 2.7% (Consensus: 0.3% m-o-m, 2.7% y-o-y). Strong employment growth and a tick down in the labor force participation rate (LFPR) should lower the unemployment rate 0.1pp to 3.9% (Consensus: 3.9%) with some risk of it falling below that level. Altogether, we expect the July employment report to highlight the firm footing of the US economy moving into Q3 2018

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the pair is hovering around the 38.2% retracement of its latest daily slump with no clear directional strength according to technical readings in the 4 hours chart:

“The price is stuck between the 100 and 200 SMA, while the Momentum heads lower but the RSI north, not far from their midlines. The pair found support in a former resistance, the 111.40 region, the level to break to confirm a new leg lower for this Friday, although direction, in this case, will depend on the outcome of the US Nonfarm Payroll report.”