USD/JPY is expected to consolidate with a buoyant tone after hitting a three-week high at 120.40 on Thursday as markets are awaiting U.S. February nonfarm payrolls at 1330 GMT (expected to have increased by 240,000), unemployment rate (expected to have slipped to 5.6% from January's 5.7%), and average hourly earnings (forecast 0.2%). USD/JPY is underpinned by the broadly firmer dollar undertone (ICE spot dollar index hit 11-year high 96.593 Thursday, last 96.33 versus 95.91 early Thursday). USD/JPY is also supported by the reduced safe-haven appeal of the yen as global risk sentiment improves (VIX fear gauge eased 1.34% to 14.04; S&P 500 rose 0.12% to close at 2,101.04 overnight) after European Central Bank President Draghi confirmed the ECB's EUR60 billion-a-month bond purchase program would begin next Monday and commented optimistically on the outlook for eurozone growth and inflation. Demand from Japan's importers and ultra-loose Bank of Japan's monetary policy are also driving forces. But USD/JPY gains are tempered by the lower U.S. Treasury yields (2-year at 0.642% versus 0.658% late Wednesday), Japan's export sales, and positions adjustment ahead of the weekend. U.S. data were mixed on Thursday as smaller-than-expected 2.2% drop in U.S. 4Q revised non-farm productivity (versus forecast -2.3%) and bigger-than-expected 4.1% rise in U.S. 4Q unit labor costs (versus forecast 3.6%) were offset by more-than-expected 320,000 U.S. jobless claims in week ended Feb. 28 (versus forecast 296,000) and surprise 0.2% on-month drop in U.S. January factory orders (versus forecast 0.1%).
The daily chart is positive-biased as MACD and stochastics are bullish, five and 15-day moving averages are advancing.
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As long as the price is keeping above its pivot point, a long position is recommended with the first target at 120.35 and the second target at 120.60. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 119.60. A break of this target would push the pair further downwards, and one may expect the second target at 119.35. The pivot point is at 119.75.
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Uitgevoerd door, Analytische expert
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