USD/JPY steadies near 109.80, looks to add more than 100 pips for the week

• USD/JPY remains on track to snap four-day winning streak.
• US Dollar Index extends rally to 98.70 on Friday.
• 10-year US Treasury bond yield erases more than 3%.

The USD/JPY pair is trading in the negative territory on Friday as the sour market mood helps the JPY stay strong against the USD. As of writing, the pair was down 0.17% on the day at 109.80. Despite today’s poor performance, however, the pair remains on track to close the week nearly 140 pips higher.

The 10-year US Treasury bond yield is down 3.5% on Friday as the relief rally that started earlier in the week seems to be fading away amid a lack of positive developments surrounding the coronavirus outbreak. Reflecting the flight-to-safety, Wall Street’s main indexes are trading with modest losses.

USD capitalizes on jobs data

On the other hand, the broad-based USD strength is limiting the pair’s losses. The data published by the US Bureau of Labor Statistics on Friday revealed that Nonfarm Payrolls (NFP) in January rose by 225,000 to beat the market expectation of 160,000. Furthermore, the annual wage inflation, as measured by the Average Hourly Earnings, edged higher to 3.1% from 3%.

Commenting on the market reaction to the NFP report, “Markets reacted with lower longer-term bond yields and falling equities, which seems a bit strange given the strong labour market report but we still doubt that this labour market report has led to much disappointment,” said analysts at Nordea.

Boosted by the upbeat data, the US Dollar Index, which tracks the USD’s performance against a basket of six major currencies, advanced to its highest level since early October at 98.70 and was last up 0.22% on the day at 98.68.

Technical levels to watch for