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USD/JPY Technical Analysis: Yen Gains on US Economic Data, BoJ Policy Outlook

During Thursday’s Asian trading session, the Japanese Yen (JPY) saw increased safe-haven demand, effectively reversing a significant portion of its weekly losses against the US Dollar (USD). This change in market sentiment was influenced by the US ADP report, indicating a noticeable decrease in private-sector employment, following the US Labor Department’s announcement of a sharp drop in job openings, the lowest since March 2021.

These developments have raised concerns about a potential economic slowdown and lessened the appeal for riskier assets, enhancing the demand for traditional safe-havens like the Yen.

The USD/JPY pair is experiencing difficulty in regaining its position above the 100-day Simple Moving Average (SMA), further impacted by the subdued performance of the USD. The latest labor market data reinforces the likelihood of the Federal Reserve reducing interest rates early next year, keeping the 10-year US government bond yield near a three-month low.

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This scenario presents challenges for the US dollar and influences the trading dynamics of major currency pairs.

Bank of Japan officials have recently downplayed the possibility of imminent changes in their monetary policy, which could restrain aggressive bullish bets on the Yen and provide some support to the USD/JPY pair.

Market participants are now looking ahead to the release of the US Nonfarm Payrolls (NFP) report on Friday for further direction, while Wednesday’s Weekly Initial Jobless Claims data, along with overall market sentiment, are also expected to offer additional guidance.

USD/JPY Technical Outlook

Regarding the technical outlook for the USD/JPY pair, there’s a bearish trend following a rebound from the previously broken support of the bullish channel. The pair is moving towards the 146.17 level, which, if breached, could lead to further bearish correction targeting 144.47.

The bearish momentum is underpinned by the negative pressure from the EMA50, with key levels to watch being the support at 146.00 and resistance at 147.50 for the day’s trading.

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Arslan Butt
Index & Commodity Analyst
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.
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