- Investors are eagerly awaiting the US non-farm payrolls report.
- For the first time in more than a month, the yen is rising against the dollar.
- The yen has lost 12 percent of its value since the beginning of the year.
USD/JPI price analysis tilts south as the yen retreats from its 38-year low, strengthening for a second session. On the other hand, the dollar was fragile as investors eagerly awaited the US non-farm payrolls report.
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For the first time in more than a month, the yen is rising against the dollar. However, the risk of intervention remains high. The currency has lost 12 percent of its value since the beginning of the year. Traders sold the yen and bought the dollar due to the wide gap in rates between the US and Japan.
Although the BoJ has begun its rate hike cycle, the future remains bleak. Spending in Japan remains weak and a fragile economy complicates the outlook for a rate hike. Therefore, investors continued to sell the yen. This prompted the BoJ to intervene in the market twice. However, the impact was only temporary, as the decline continued later.
Japan’s finance minister repeated his usual warning on Friday, saying Japan would keep a close eye on financial markets.
Meanwhile, after a week of poor economic data, the dollar was weakened on Friday. The US economy is slowing down, and data on employment and business activity have confirmed this. Accordingly, markets have increased the likelihood of a September Fed rate cut to 73%. However, this could change with the upcoming monthly employment data. If the US adds fewer jobs than expected, expectations for a rate cut will rise. The reverse is also true.
USD/JPI Key Events Today
- Average hourly earnings in the US m/m
- US Non-Farm Payrolls
- Unemployment rate in the US
USD/JPI Technical Price Analysis: Bears take lead after bearish RSI divergence
On the technical side, the price of USD/JPI has fallen below the 30-SMA for many weeks. A breakout indicates a change in sentiment from bullish to bearish. At the same time, the RSI fell into sub-50 territory, indicating a strong bearish trend.
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The bulls were exhausted as the price approached the key level of 162.01. Notably, the RSI made a bearish divergence, highlighting a weaker bullish momentum. This allowed the bears to take control by pushing the price below the 30-SMA. There is now a clear path for the price to revisit support levels such as 160.00 and 158.00.
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