- US jobless claims fell to 233,000.
- Despite signs of weakness, the US labor market remains resilient.
- BoJ minutes on Thursday showed a hawkish tone among policymakers.
USD/JPI outlook tilts bullish as dollar rebounds after upbeat US employment data. Meanwhile, the yen extended its decline as concerns over the recent recession eased and risk appetite improved.
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On Thursday, the US released jobless claims data showing a drop to 233,000, the biggest drop in nearly a year. Economists had expected 240,000 claims. The figures eased fears that the job market was rapidly deteriorating. Last week, data showed a huge jump in the unemployment rate, sparking fears of a slowdown. This panic has boosted the yen, which is seen as a safe haven in times of uncertainty.
However, the easing later returned as data showed that other sectors of the US economy remained resilient. The dollar traded near a four-month low as expectations of a Fed rate cut rose. However, this decline was halted as the market turmoil subsided. Despite signs of weakness, the labor market remains resilient. Still, last week’s report was the catalyst for the Fed to start cutting borrowing costs to avoid a new downward trend in the sector.
Meanwhile, the yen has remained vulnerable since the Bank of Japan’s deputy governor dashed hopes of a near-term rate hike. He called for a pause due to recent volatility in global markets. Meanwhile, BoJ minutes on Thursday showed a hawkish tone, increasing uncertainty over central bank policy.
USD/JPI Key Events Today
It could be a slow end to the week as investors do not expect key reports from Japan or the US.
USD/JPI Technical Outlook: Bulls steady above 30-SMA
On the technical side, the USD/JPI price is trading above the 30-SMA and the RSI is above 50, indicating a bullish bias. This change comes after the price reversed at the 142.56 level. Here, the price became deeply sold off, allowing the bulls to resurface.
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A new direction above the SMA will allow the price to revisit the 150.03 resistance level. If it breaks above, it will reach resistance at 155.01. However, there is also a chance that this is just a deep pullback before the price reverses to the downside. However, the bears will only return if the price falls below the 30-SMA. Otherwise, USD/JPI will start making more highs and lows.
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