The Dollar/Yen is edging higher on Friday as 10-year U.S. Treasury yields pushed above the 1.57% mark, headed toward their highest level since September 28. Rising yields are widening the spread between U.S. Government bond yields and Japanese Government bond yields, making the U.S. Dollar a more attractive asset.
At 03:41 GMT, the USD/JPY is trading 111.862, up 0.223 or +0.20%.
All eyes are on Friday’s U.S. Non-Farm Payrolls report, due to be released at 12:30 GMT, which will be key as the Federal Reserve prepares to slow its $120 billion-per-month bond-buying program.
Economists are expecting the economy to have added 500,000 jobs in September, according to estimates from Dow Jones. In August, just 235,000 jobs were added, significantly below the consensus estimate of 720,000.
The Federal Reserve has said it is likely to begin reducing its monthly bond purchases as soon as November and then follow up with interest rate increases, as the U.S. central bank’s turn from pandemic crisis polices gains momentum.
A stronger-than-expected jobs report could drive Treasury yields sharply higher. The USD/JPY could jump to multi-year highs on the news.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through 112.078 will signal a resumption of the uptrend. A move through 110.826 will change the main trend to down.
The minor range is 112.078 to 110.826. Its 50% level or pivot at 111.452 is new support.
The short-term range is 109.122 to 112.078. If the main trend changes to down then its retracement zone at 110.596 to 110.246 will become the primary downside target area.
Daily Swing Chart Technical Forecast
The direction of the USD/JPY on Friday will be determined by trader reaction to the pivot at 111.452.
Bullish Scenario
A sustained move over 111.452 will indicate the presence of buyers. If this move continues to generate enough upside momentum then look for a test of 112.078, followed by the February 20, 2020 main top at 112.226 and the April 24, 2019 main top at 112.405.
The main top at 112.405 is a potential trigger point for an acceleration to the upside with the December 13, 2018 main top at 113.710 the next major upside target price.
Bearish Scenario
A sustained move under 111.452 will signal the presence of sellers. The first downside target will be a new pivot at 111.360. If this fails then look for the selling to possibly extend into the main bottom at 110.826.
Taking out 110.826 will change the main trend to down with 110.596 to 110.246 the next target area.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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