The USD/JPY pair was closed at 109.157 after placing a high of 109.195 and a low of 108.613. Overall the movement of USD/JPY remained bullish throughout the day. USD/JPY pair followed its previous day's trend and surged for 3rd consecutive day on Thursday. The pair moved in the upward direction but failed to find acceptance above the 109 level. The gains in the USD/JPY pair were range bounded on Thursday due to the exerted pressure by the rising demand for safe-haven Japanese Yen. The increasing tensions between the US & China forced investors to take refuge in safe-haven currencies. Washington announced that it would ban the Chinese airlines from entering the US from June 16 in response to the Chinese government's move to ceasing the re-entry of US carriers in China.
The Transportation Department of the US banned Chinese airlines in return, and after some hours, Chinese aviation issued a notice to open the entry for American carries. Though China took its decision back, this portrays the hate of both nations for each other. And as long as the hate persists, the trade war chances will remain there. The escalating conflicts and moves to disturb each other by both nations increased the demand for safe-haven in the market and exerted pressure on the gains of USD/JPY on Thursday.
On the other hand, some aggressive selling in the US dollar was seen after the strong bond buying from the European Central Bank. The weakness of the US dollar was also caused by the poor than expected US Jobless claims last week, which were reported as 1.88M against 1.82M of expectations.
Despite the US dollar's weakness, the pair USD/JPY still managed to maintain its bullish trend due to risk-on market sentiment. The reducing cases of coronavirus and gradual re-opening of economies from across the globe added in the risk appetite and support USD/JPY pair.
The US 10-year Treasury yield rose by six basis points to the late-March high of 0.82% and supported the upward trend of currency pair.
On the data front, the Revised Nonfarm Productivity for the quarter showed a decline of 0.9% against the expected decline of 2.5% and weighed on the US dollar. At 17:30 GMT, the Revised Unit Labor Cost for Quarter increased by 5.1% against the expected 4.8% and supported the US dollar. The Trade Balance from the United States for April showed a deficit of 49.4B against the expected deficit of 41.5B and weighed on the US dollar.
Daily Technical Levels
Support resistance
108.76 109.35
108.40 109.56
108.18 109.93
Pivot Point: 108.98
The USD/JPY pair is trading at 109.416, and technically, the USD/JPY is likely to face immediate resistance at 109.430 level while bullish breakout of this level can lead the USD/JPY prices further towards 110 level. On the other hand, the support holds at 108.630 level, which is extended by an upward trendline at 109 level. Below this, the next support holds around 108.600 level. Recent candles are exhibiting a neutral sentiment among traders, and that's because of the NFP figures, which are keeping investors out of the market ahead of the news release. Let's keep an eye on 109.430 to stay bearish or bullish above this today. Good luck!