USD/JPY Fundamental Daily Forecast – Mixed US Jobs Report Details Encourage Profit-Taking

The Dollar/Yen posted a dramatic closing price reversal top on Friday after testing its highest level since March 24, 2020. The move was fueled by the tightening of the spread between U.S. Government bond yields and Japanese Government bond yields. The catalyst was a mixed U.S. Non-Farm Payrolls report that showed a headline number beat, but a disappointing unemployment rate and average hourly earnings pace.

On Friday, the USD/JPY settled at 111.026, down 0.509 or -0.46%.

Technical Analysis

The main trend is up according to the daily swing chart, however, the formation of the closing price reversal top may have signaled the start of a shift in momentum to the downside.

A trade through 111.659 will negate the closing price reversal top and signal a resumption of the uptrend, while a move through 110.420 will change the main trend to down.

USD/JPY Slides from 3-Month High on Weak Details of US Jobs Report

The USD/JPY slipped from a more than 15-month high on Friday, weighed down by some of the weaker details of what was an overall strong U.S. non-farm payrolls report for June.

Data showed that U.S. nonfarm payrolls did beat expectations, increasing by 850,000 jobs last month after rising 583,000 in May. But the unemployment rate rose to 5.9% from 5.8% in May, while the closely-watched average hourly earnings, a gauge of wage inflation, rose 0.3% last month, lower than the consensus forecast for a 0.4% increase.

In other news, the U.S. trade deficit increased in May as efforts by business to rebuild inventories amid booming demand pulled in imports.

The Commerce Department said on Friday that the trade gap rose 3.1% to $71.2 billion in May. Economists polled by Reuters had forecast a $71.4 billion deficit. Goods imports rose 1.2% to $234.7 billion. Exports of goods gained 0.3% to $145.5 billion, a record high.

New orders for U.S.-made goods rebounded sharply in May, while business spending on equipment remained solid, despite bottlenecks in the supply chain.

The Commerce Department said on Friday that factory orders surged 1.7% in May after slipping 0.1% in April. Economists polled by Reuters had forecast factory orders rebounding 1.6%. Orders increased 17.2% on a year-on-year basis.