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  • Trump’s latest criticism over Fed’s policy stance caps the post-NFP USD upsurge.
  • Weaker equities underpin JPY’s safe-haven demand and add to a modest pullback.
  • BoJ’s commitment to maintain easing bias helped limit any meaningful downside.

The USD/JPY pair ticked lower at the start of a new trading week and eroded a part of Friday’s post-NFP upsurge to 2-1/2 week tops.  

The latest US monthly jobs report showed that the US economy added 224K new jobs in June and dampened prospects for an aggressive Fed rate cut move later this July. The same was evident from a sharp intraday upsurge in the US Treasury bond yields, which underpinned the US Dollar demand and provided a goodish lift to the major.

The uptick, however, lacked any strong follow-through, rather once again faltered near the 108.65-70 supply zone in reaction to the US President Donald Trump’s fresh criticism on the Fed’s policy tightening, which held the USD bulls from placing any aggressive bets.  

This coupled with a weaker tone around equity markets, amid fading optimism over a quick resolution to the prolonged US-China trade disputes, benefitted the Japanese Yen’s safe-haven status and further collaborated toward capping gains or failed to assist the pair to build on its positive momentum.  

Meanwhile, the recent comments by the BoJ Governor Kuroda, reiterating that they will maintain easing for as long as needed to hit stable 2% inflation, now seemed to be the only factor that helped limit any further downside for the major, at least for the time being, amid absent relevant market moving economic releases.

Moving ahead, the market focus now shifts to the Fed Chair Jerome Powell’s two-day Congressional testimony on Wednesday and Thursday, which might now play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus for the major.

Technical levels to watch