- USD/JPY meets resistance in the open this week as traders weigh the underlying of the US economy.
- Weekly support is in focus within the heavily bid environment.
After the heavy bid in the greenback at the end of the week’s sessions following Federal reserve’s Chair Jerome Powell’s comments, the yen is showing some resilience as the mighty dollar gives back a little breathing room to G10-FX to start the week.
At the time of writing, USD/JPY is trading at 108.40 and better bid from the opening price down at 108.26. The price met a nine-month high after the US nonfarm Payrolls payrolls data on Friday, but the market is weighing whether the reality of the situation doesn’t contradict the hype.
US February nonfarm payrolls trounced expectations and January’s data were revised up, but the underlying fact remains that there are still millions of the population permanently out of work.
As lockdowns ease, people fortunate enough to be able to return to their jobs will do so, but many still do not have a job to go back to. A spike in jobs, in the interim, should be expected, but the forward outlook is so much more dubious.
As noted by analysts at ANZ Bank noted, ”most of the job gains came in leisure and hospitality (particularly food services and drinking places) as the COVID infection rate receded,” given the easing lockdown measures. However, the trade deficit paints a bearish backdrop to the data.
Meanwhile, over the weekend, US President Joe Biden’s $1.9trn stimulus passed the Senate 50-49 and it will go to the House on Tuesday. Overall, the stimulus is twice the size of Obama’s 2008-09 package and the US stock markets will likely find comfort in the balancing act between this and the threat of higher borrowing costs.
USD/JPY technical analysis
as it stands, the price is meeting 4-hour resistance and the daily weekly territory is compelling.
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