USD/JPY Falls Below 161.20 as Weaker US Dollar and Stronger Yen Weigh Ahead of NFP

Quick overview

During the European trading session, the USD/JPY currency pair failed to stop its bearish trend and is still showing losses on the day. However, the reason for its upward trend can be attributed to the weaker US dollar. Meanwhile, the cautious sentiment in the market ahead of a very important US jobs report is also pushing this pair down by strengthening the safe haven Japanese yen. Moreover, the possible official intervention by Japanese authorities is also underpinning the JPY, which puts further pressure on the USD/JPY pair.

At the time we are writing this article, the USD/JPY currency pair is trading at $161.19 level, showing more than 1 percent losses on the day.

US Dollar Falls as Everyone Waits for Important Jobs Report Today

On the US front, the broad-based US dollar is showing bearish performance on the day. This can be witnessed by the latest decline in the US Dollar Index. As of now, the DXY is trading at $101.04, showing 0.35 percent losses on the day. However, the reason for that is a highly careful market ahead of the US June Nonfarm Payrolls (NFP) report, which is set to be released on the day. This data is consider important as it tells the exact number of jobs that were created in the United States in the month of June.

As of now, the market expects only 110,000 new jobs, which is much lower than the previous 172,000 number. On the other hand, the unemployment rate is expected to remain at 4.3 percent.

If the actual figures come in weaker than expected, investors will see it as a sign that the US economy is slowing down. This would undermine the US dollar and contribute to the USD/JPY pair losses. However, if the report comes out stronger than expected, this would help dollar to limit its losses.

Japanese Yen Gets Stronger as Traders Watch Government Support Closely

On the other hand, the sudden strengthening of the Japanese Yen is also a major reason behind the fall in the USD/JPY currency pair. As we all know, the Japanese Yen was already very weak and had reached its lowest level in nearly 40 years. But, as soon as trading started this morning, the Yen suddenly gained traction and recorded some gains. Many traders and experts believe that this could be because of intervention, meaning direct support from the Japanese government.

Japan Finance Ministry has not made any clear comment on it yet, which is increasing uncertainty in the market. Since we all know, Japan does not like a weak Yen at all because it makes imported goods like oil, food and many things very expensive, which harms their economy. That is why they can take action at any time to support the Yen. Moving on, traders are waiting for every small news to see what Japan will do next.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

Whales Are Loading Up: BTC, XRP & ETH Flash Mixed Signals

7 hs ago

Save

Bitcoin's Biggest Buyer Just Hit the Brakes: Is More Pain Coming?

7 hs ago

Save

Warren Targets Crypto Law After Trump's $1B Disclosure

8 hs ago

Save