gained more than 60 pips on Friday, spiking to the 139.70 zone following the labor market data from the US which suggested that the Federal Reserve may reconsider a further hike. As a reaction, the US Dollar gained traction on the back of rising US bond yields while Japanese yields continue to decline.The US Bureau of Labor Statistics released that employment in the US measured by the increased by 339k, way above the consensus of 190k.
In that sense, while signs of slowing labor demand have emerged, the strong employment growth and persistent inflation are pressuring the Fed to consider further rate hikes which fueled an increase of the US bond yields. The US bond yields experienced an increase as a result of strong employment growth and persistent inflation, putting pressure on the Federal Reserve to consider raising interest rates. The 10-year bond yield in the US increased by 1%, reaching 3.67%.
In contrast, Japanese bond yields declined. The 10-year yield decreased by 1.68% to 0.41%, while the 2-year yield fell by 9.7% to stand at -0.07%. Furthermore, the 5-year yield in Japan experienced an 8.78% decrease, reaching 0.07% and applied further pressure on the Yen..
The 140.00 level is key for USD/JPY to gain further traction. If cleared, we could see a more pronounced move towards the 140.50 zone and the psychological mark at 141.00. On the other hand, immediate support for USD/JPY is seen at the 138.90 zone level, followed by the 138.50 level and the psychological mark at 138.00.