Key Points
- USD/JPY eased slightly to around 157.00 during Friday’s Asian session.
- Japanese authorities reportedly intervened in the FX market again over the May holiday period.
- Traders are now focusing on the release of the US April employment report later on Friday.
USD/JPY traded cautiously around the 157.00 level during Friday’s Asian session, following the previous session’s rebound and mirroring the US Dollar’s recovery. However, gains remained limited as traders stayed alert to the possibility of further Japanese FX intervention. Market participants also appeared reluctant to take aggressive positions ahead of the release of the US April employment report later on Friday.
Japan Signals Readiness for Further FX Intervention
According to a Reuters report on Friday, citing a source familiar with the matter, Japanese authorities intervened in the foreign exchange market during the early May holiday period following their Yen-buying operations on April 30. The source noted that the timing was chosen to coincide with thinner market liquidity during the holidays.
The possibility of additional intervention may continue to support the Japanese Yen and limit upside momentum for the pair. Meanwhile, Japan’s top foreign exchange official, Atsushi Mimura, stated on Thursday that authorities stand ready to respond to speculative movements in the FX market through all available measures.
Markets await US jobs data as dollar stays under pressure
Attention now shifts to the release of the US April employment report later on Friday. Analysts forecast Nonfarm Payrolls (NFP) to rise by 60K, while the Unemployment Rate is expected to hold steady at 4.3%. Traders will also monitor the weekly Initial Jobless Claims data scheduled for release on Thursday.
Meanwhile, the US Dollar continues to face broad selling pressure, with the US Dollar Index (DXY) hovering near two-month lows around 97.90. Expectations of a more dovish approach from the Federal Reserve (Fed) continue to weigh on the Greenback, limiting its strength against the Japanese Yen.
USD/JPY Technical Outlook
The USD/JPY pair is currently trading around 156.88, hovering just below the key resistance level at 157.00. In the 4-hour timeframe, two strong bearish candles have emerged, which are widely believed to be linked to intervention by Japanese authorities. As a result, the previous bullish market structure has been invalidated, with price action now showing early signs of a bearish sequence characterised by lower highs and lower lows.
Moving averages are currently converging following a rebound from the 155.00 support level, suggesting a lack of clear directional momentum in the short term. For potential short setups, a sustained break below 155.00, accompanied by a bearish alignment of the moving averages, would provide stronger confirmation. In addition, the MACD signal line remains below the zero line, although bullish histogram readings are still present. A shift back to bearish histogram momentum would further support downside positioning.
Key Levels To Watch:
- Support: 155.868 -> 155.000
- Resistance: 157.000 -> 158.000
What Comes Next:
Market attention has now shifted to the US April employment report, scheduled for release on Friday. Economists are forecasting an increase of 65K in Nonfarm Payrolls (NFP), while the Unemployment Rate is expected to remain unchanged at 4.3%. Meanwhile, investors will also be monitoring the weekly Initial Jobless Claims data due later on Thursday.
Learn more about trading Forex Pairs on VT Markets here.
Trader Question
Why is the USD/JPY pair trading cautiously around 157.00 level?
The pair is experiencing limited volatility as traders weigh two major factors: the recovery of the US Dollar and the heightened risk of currency intervention by Japanese authorities. Additionally, market participants are hesitant to take large positions ahead of the upcoming US Nonfarm Payrolls (NFP) report.
Has Japan recently intervened in the foreign exchange market?
Reports indicate that Japanese authorities likely intervened during the early May holiday period, following Yen-buying operations on April 30. These actions were strategically timed to coincide with thinner market liquidity during the holidays to maximize impact.
What is the current stance of Japanese officials regarding the Yen?
Japan’s top FX official, Atsushi Mimura, has signaled that authorities are ready to respond to speculative market movements using all available measures. This proactive stance suggests that further intervention remains a significant possibility if the Yen weakens excessively.
What are the market expectations for the US April employment report?
Analysts forecast that Nonfarm Payrolls (NFP) will show an increase of 65,000 jobs. The Unemployment Rate is expected to hold steady at 4.3%. These figures are critical as they influence expectations regarding the Federal Reserve’s future interest rate decisions.
Start trading now – Click here to create your real VT Markets account
