The Dollar/Yen is trading sharply higher at the mid-session on Friday in reaction to a surge in the 10-year U.S. Treasury note yield back above 2%. The catalyst behind the move was the government’s monthly jobs report that showed much stronger-than-expected employment growth in June than forecast.

Given the relative strength in the jobs report, policymakers at the Federal Reserve may see that as further evidence that an interest rate cut isn’t needed to keep U.S. economic expansion alive.

According to the financial futures markets, investors are still pricing in 100% probability of a 25 basis point cut at the July Federal Open Market Committee meeting, but that is down from 120% probability priced in Wednesday.

At 17:12 GMT, the USD/JPY is trading 108.537, up 0.713 or +0.66%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up earlier today when buyers took out the swing top at 108.534. The next targets are a pair of main tops at 108.728 and 108.805.

The new main bottom is 107.534. A trade through this level will change the main trend to down.

The main range is 110.677 to 106.775. Its retracement zone at 108.726 to 109.186 is the primary upside target. Even with the trend up. Sellers could come in on the first test of this area. Taking out 109.186, however, will indicate the buying is getting stronger.

Daily Technical Forecast

Based on the early upside momentum and the current price at 108.537, the direction of the USD/JPY into the close is likely to be determined by trader reaction to the downtrending Gann angle at 108.615.

Bullish Scenario

Taking out and sustaining a rally over 108.615 will indicate the buying is getting stronger. This could trigger quick rally into the main 50% level at 108.726 then the uptrending Gann angle at 108.775. Watch for profit-taking.

Overtaking 108.775 could trigger an acceleration to the upside with the next targets another longer-term downtrending Gann angle at 109.159, followed closely by the main Fibonacci level at 109.186.

Bearish Scenario

The inability to overcome or a sustained move under 108.615 will signal the presence of sellers. This could trigger a retracement of today’s intraday range to 108.203.

Overview

On June 19, the date of the last Fed monetary policy announcement, the USD/JPY settled at 108.095. The Forex pair is currently trading higher that that price.