USD/JPY Forecast: Soaring ahead of the Nonfarm Payroll report

USD/JPY Current price: 108.50

• The US is expected to have added 182K new jobs in February.
• Government bond yields keep reaching new one-year highs.
• USD/JPY is extremely overbought but still bullish ahead of the weekly close.

The USD/JPY pair trades at fresh 2021 around 108.50, as US Federal Reserve chief Jerome Powell brought back the yields’ frenzy. In a televised interview on Thursday, Powell repeated that, while there has been progress, the country is still far away from Fed’s goals on inflation and employment. When asked about Treasury yields, he noted that they are not a condition to change the current monetary policy, adding that substantial progress towards employment and inflation targets is needed.

Wall Street plunged, dragging Asian and European indexes lower this Friday. On the other hand, government bond yields soared, with that on the 10-year note now at 1.55% after hitting 1.58% ahead of the opening.

Japan published February Foreign Reserves at the beginning of the day, which resulted in $1379.4 billion from $1392.1 billion previously. The focus is now on US employment figures. The country will release the February Nonfarm Payroll report, expected to show that 182K new jobs were added in the month. The unemployment rate is foreseen steady at 6.3%.

USD/JPY short-term technical outlook

The USD/JPY pair is extremely overbought in the near-term but without signs of changing course. In the 4-hour chart, the pair continues distancing from its moving averages, with the 20 SMA currently at 107.20. Technical indicators keep heading north despite the extreme readings, with the RSI currently at 83. The advance could extend with an upbeat US report, although profit-taking is expected ahead of the weekly close.

  Support levels: 108.15 107.70 107.25

Resistance levels: 108.55 108.90 109.30

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