- Initial US jobless claims fell from 243,000 to 238,000 last week.
- The probability of a Fed tapering in September fell to 58%.
- The Swiss National Bank cut interest rates for the second time on Thursday.
USD/JPI price analysis points to the north, as the dollar hovers near a 7-week high against the yen, which it reached in the previous session. The dollar strengthened on upbeat employment data and a growing contrast in the political outlook with other major central banks.
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Investors are worried about possible intervention as the dollar strengthened against the yen on Thursday. The rally came amid data showing a drop in US jobless claims. Initial jobless claims fell from 243,000 to 238,000 last week, indicating continued strength in the labor market. However, there were signs that unemployment was on the rise. In particular, the total number of benefits rose to the highest level since the beginning of the year.
After the report, the probability of a Fed tapering in September fell to 58%. At the same time, policymakers remain cautious about inflation and the prospect of rate cuts. In particular, the Fed’s Neel Kashkari said it would take one to two years for inflation to come down to the target, a longer period of time that raised concerns about high rates.
The Fed remained mildly hawkish, forecasting one rate cut in December. However, other central banks plan to taper earlier. Furthermore, the Swiss National Bank cut rates for a second time on Thursday, opening the door for more global rate cuts. This contrast benefited the dollar and weighed on the yen.
Meanwhile, the Bank of Japan was higher than expected at its last meeting, which hurt the Japanese currency. With the BoJ delaying a hike and the Fed delaying a cut, the rate gap between the two countries remains wide.
USD/JPI Key Events Today
- US manufacturing PMI
- US flash services PMI
USD/JPI price technical analysis: bullish momentum pauses at 1,414 Fib resistance
On the technical side, the USD/JPI price rose to the 1,414 Fib extension level in a strong bullish move. The price is trading well above the 30-SMA, which supports the bullish bias. Meanwhile, the RSI has reached overbought territory for the first time in a while, indicating an increase in bullish momentum.
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However, after such a large swing, the price must stop or pull back to retest the SMA or bullish trend line. However, given the solid bullish bias, the uptrend could continue above the Fib extension level at 1,414.
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