- Summary:
- USDJPY has found tailwinds following the outcome of Japan’s wage negotiations, amid resurgence by US treasury bond yields.
The US dollar gained ground against the Japanese yen on Friday, as Japan’s wage dynamics weighed in. USDJPY traded at 148.30 at the time of writing, up by 0.3% on the daily chart, ensuring a continuation of the alternating pattern of weekly gains between the yen and the dollar.
Japan’s labour unions managed to agree a 5.46% hike in workers’ pay, falling short of the projected raise of 6%. That reduced the prospect of the Bank of Japan (BoJ) raise interest rates when it makes its decision on Tuesday next week. That will limit the yen’s upside against the greenback.
Meanwhile, the dollar is supported by a strong show by the US labour market. The country’s Initial Jobless Claims printed out at 220k. That was less than the forecast figure of 226k, providing some reprieve after the weak Non Farm Payrolls (NFP) figures released last week.
Also, yields on benchmark 10-year US treasury bonds are back up as of this writing, gaining 2.3 basis points to stand at 4.299%. That is likely to widen the gap against Japanese Government Bonds, which had recently been on the rise. This sets up the USDJPY pair for a likely continuation of the upside trajectory heading into the weekend.
USDJPY Prediction
USDJPY pivot mark is at 148.05 and action above that level signifies control by the buyers. Immediate resistance will likely be at 149.00. However, an extended upward momentum will clear that barrier and potentially result in further gains to test the second resistance at 149.72.
On the downside, USDJPY will likely find the first support at 147.49 if it breaks below the pivot mark. With the sellers in control, a stronger downward momentum could break below the first support and invalidate the upside narrative. Also, such momentum could result in a further decline, with the currency pair likely to test the second support at 146.90.
