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  • USD/JPY stalled the recent strong bullish momentum near the very important 200-day SMA.
  • A subdued USD price action seemed to be the only factor that prompted some profit-taking.
  • The underlying bullish sentiment undermined the safe-haven JPY and helped limit the fall.

The USD/JPY pair witnessed a modest pullback from near three-month tops set earlier this Friday and was last seen trading with modest losses, around mid-105.00s.

The pair failed to capitalize on its early uptick, instead faced rejection near the very important 200-day SMA and for now, seems to have stalled a two-week-old upward trajectory. Following the recent rally to the highest level in more than two months, the US dollar now seems to have entered a bullish consolidation phase. This, in turn, was seen as a key factor that held bulls from placing fresh bets around the USD/JPY pair amid near-term overbought conditions.

That said, prospects for additional US fiscal stimulus, hopes for a strong economic recovery and progress with coronavirus vaccinations continued lending some support to the greenback. Apart from this, the underlying bullish sentiment in the financial markets undermined the safe-haven Japanese yen and might further collaborate towards limiting deeper losses for the USD/JPY pair. This warrants some caution before positioning for any meaningful corrective slide.

Investors also seemed reluctant, rather preferred to wait on the sidelines ahead of Friday’s release of the closely-watched US monthly jobs report (NFP). This further makes it prudent to wait for some follow-through selling before confirming that the USD/JPY pair might have topped out in the near-term. the US economy is expected to have added 50K new jobs in January and the unemployment rate is anticipated to hold steady at 6.7% during the reported month.

Technical levels to watch