USD/JPY falls below 133.00 on US Dollar weakening and NFP data

Price analysis for the USD/JPY: Likely to be strongly bearish below 133.00. Despite the tight labor market, the US Nonfarm Payrolls statistics for December reduced the value of the US dollar. The softening of the average hourly wage led to expectations that the Federal Reserve would act dovish during its meeting in February. The US economic statistics, although good, put pressure on the US Dollar, causing the USD/JPY to battle at the 200-day Exponential Moving Average (EMA) around 134.82 and fall below the 134.00 level. This contributed to a loss of 100 pip in the major. The USD/JPY is now trading at 132.81, down from its initial price by 0.44%.

According to figures released by the US Department of Labor on Friday, Nonfarm Payrolls climbed by 223K in December, above predictions of 200K. While average hourly wages increased 4.6%, below the market forecast of 5.0%, the unemployment rate decreased to 3.5% YoY, which pleased Fed policymakers who saw wage pressures as a barrier to combating inflation.

“Revisions to average hourly earnings statistics portray a little less gloomy picture for the Fed on wages than the Nov report,” The Wall Street Journal (WSJ) Fed Watcher Nick Timiraos tweeted.

In response to the Timiraous Tweet, the US Dollar Index, which gauges the dollar’s value against a group of competitors, fell to 104.963, below the 105.000 thresholds. However, it gained some ground before reversing course and turning negative at around 104.682, down by 0.46%.

The USD/JPY is falling from daily highs achieved at 134.77 as US Treasury note rates decreased by nine basis points to end at 3.625%.

Raphael Bostic, president of the Fed in Atlanta, has recently been making headlines. He said that the December labor market statistics did not alter his assessment of the economy and that the Fed should continue on its current trajectory since inflation is still too high. The Federal Funds Rate (FFR) is expected to reach and remain in the 5.00–5.25% range until the end of 2024, according to Bostic’s base scenario.

Price analysis for the USD/JPY: Technical Prospects

The USD/JPY hourly chart shows that the US Dollar is still losing ground in the near term, extending its advances below the daily pivot point at 133.04. The USD/JPY broke through the 20 and 50-EMAs on its way down, but a downslope trendline and the intersection of the 100 and 200-EMAs around 132.55/57, just below the S1 daily pivot at 132.03, may stop the decline. On the other hand, if the USD/JPY manages to retake 133.00, it would pave the way for a continuation of the uptrend, exposing resistance levels like the 134.00 level and the R1 daily pivot point at 134.45.