USD/JPY: eyes on US yields and US CPI this week, bearish trend capped?

Currently, USD/JPY is trading at 109.90, down -0.12% on the day, having posted a daily high at 110.07 and low at 109.85.

The week ahead: eyes on US CPI - Nomura

USD/JPY jumped from 110.00 to 111.04 on the back of the nonfarm payrolls data at the end of last week's closing session. The data showed that nonfarm payrolls rose by 209k in July and beat market expectations. "Gains were widespread across sectors," noted analysts at Westpac, adding" average hourly earnings rose a crowd pleasing 0.3% (2.5% ann), and the labour force grew a decent +349k, boosting the participation rate and unemployment fell 0.1ppts to 4.3%. There’s much to be impressed about with this jobs report and the Fed will breathe a sigh of relief on the earnings front."

On Wall Street, this transpired into the S&P 500 eking out a small gain for the week, reversing the minor loss in the previous week, which had snapped a three-week advance, as noted by analysts at Brown Brothers Harriman who highlighted that the US 10- yield has to get above around 2.35% to be anything significant:

"The September note futures contract managed to close barely above 126-10, the 61.8% retracement of the decline since June 14 high near 127-08, but this was a false breakout, as the sell-off before the weekend showed.  Initial support for the September is seen near 125-16 to 125-20. A move above 126-16 would like spur dollar losses against the yen."

USD/JPY levels

USDJPY: Buy dips or a break of 111.05

Valeria Bednark, chief analyst at FXStreet explained that the 4 hours chart shows that the pair closed below the 38.2% retracement of its latest bearish run between 112.18 and the mentioned low at 110.70, retracing from the 50% retracement of the same decline around 111.05. "In this last time frame, the 100 SMA maintains a strong bearish slope well above the level, while technical indicators hover around their mid-lines unable to provide directional clues," Bednarik noted.