USD/JPY Fluctuates Following US Economic Data – Bond Yields & Economic Uncertainty Weighing on Yen

On Thursday, the USD/JPY pair increased to 137.08 following an economic data release in the US. This increase marked the lowest level for the pair since December 20th, 2022. However, despite the initial boost, the pair could not maintain its hold above the 137.00 level, fluctuating around 136.60.

Regarding the economic data released, there were a few notable figures. First, initial jobless claims, a measure of people filling out forms for unemployment benefits for the first time, dropped to 190,000. This data beat market expectation and is a positive sign for the US economy.

On the other hand, there was a revision in non-farm productivity during Q4 from 3% to 1%, indicating a slowdown in the growth of output per hour worked in the US. In addition, unit labor costs, which are labor costs per unit of output, saw a significant change from 1.1% to 3.2%. This increase in unit labor costs could lead to an increase in inflation.

High Bond Yields and Economic Uncertainty Weighing on Yen

The Japanese yen has been the worst-performing currency across the G10 area over the last week, closely followed by the Australian dollar. This ugly performance can be attributed to the high bond yields worldwide, currently weighing on the yen. As a result, the USD/JPY pair has been in flux, with movements driven by market sentiment.

On Thursday, the pair experienced a decline in market sentiment, contributing to its fluctuation. Various factors may have driven this decline, including geopolitical tensions, central bank policies, and economic data releases.

The persistently high bond yields worldwide have significantly contributed to the yen’s weakness. Higher bond yields indicate that investors demand higher investment returns, reducing the demand for lower-yielding currencies like the yen. As a result, it has led to a decline in the yen’s value against major currencies like the US.

While the Australian dollar has declined over the last week, it has not been hit as hard as the yen. Nevertheless, the Australian dollar has been affected by various factors, including rising inflation expectations and the ongoing turmoil in global financial markets.

Analyzing Key Levels and Trends of USD/JPY

The USD/JPY pair is in an uptrend from a technical analysis perspective. The daily simple moving averages (SMAs) of 20, 50, and 100 are below the current price, suggesting a bullish trend. However, the 200-day SMA exceeds the current price, indicating a potential resistance level.

Looking at the levels, the previous daily high and low are 136.47 and 135.26, respectively. These levels may serve as support and resistance for the pair. In addition, the daily Fibonacci levels of 38.2% and 61.8% at 136.01 and 135.72 may also be key to watch.

The daily pivot points for the USD/JPY pair are S1 at 135.47, S2 at 134.76, and S3 at 134.26. These levels may serve as potential support levels if the pair experiences a downward trend. The daily pivot points for resistance levels are R1 at 136.68, R2 at 137.18, and R3 at 137.89. These levels may act as resistance if the pair experiences an upward trend.

All-in-all, the technical analysis suggests that the USD/JPY pair is currently in an uptrend, with potential support levels at 135.47 and 134.76 and potential resistance levels at 136.68 and 137.18.

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