- A subdued USD demand failed to assist USD/JPY to capitalize on Friday’s positive move.
- The upbeat market mood undermined the safe-haven JPY and helped limit deeper losses.
The USD/JPY pair edged lower on the first day of a new trading week and eroded a part of Friday’s strong positive move to over two-month tops.
The US dollar struggled to capitalize on the previous session’s positive move and was seen as one of the key factors exerting some pressure on the USD/JPY pair. It is worth recalling that the greenback staged a goodish bounce on Friday and got an additional boost following the release of stronger-than-expected US monthly jobs report.
The headline NFP showed that the US economic surprisingly added 2.509 million jobs in May as compared to consensus estimates pointing to a fall of 8 million jobs. The upbeat reading was accompanied by an improvement in the unemployment rate, which fell to 13.3% as against a big jump expected to 19.8% from 14.7% in April.
The data further fueled hopes for a sharp V-shaped recovery for the global economic recovery and reinforced expectations that the worst of the coronavirus pandemic was over. This, in turn, remained supportive of the upbeat market mood, which undermined the safe-haven Japanese yen and helped limit any deeper losses for the USD/JPY pair.
The JPY was further pressured by downbeat Japanese macro data, which showed that the economy contracted by 0.6% during the first quarter of 2020 as against a fall of 0.5% estimated. Adding to this, the domestic Current Account surplus narrowed to JPY 262.7 billion in April, down from the previous month’s JPY 1971 billion.
There isn’t any major market-moving US economic data due for release on Monday. This further makes it prudent to wait for some strong follow-through selling before confirming that the USD/JPY pair have topped out in the near-term and positioning for any further depreciating move.
Technical levels to watch
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