Dollar reaches new highs after NFP report
The dollar surged to new highs on Friday following the release of the NFP report, which showed unexpectedly strong growth in US job numbers. Economists had predicted 140,000 new jobs for September, but the actual figure revealed a much higher 254,000 employed individuals for the month. This positive data also led to a decrease in the unemployment rate from 4.1% to 4.0%. This robust labor market performance has alleviated pressure on the Fed to implement aggressive rate cuts, diminishing the likelihood of a large cut in November. Instead, there is a 95% probability of a more modest rate reduction.
The series of positive economic reports last week emphasized the resilience of the US economy, with indicators such as job openings and private employment surpassing expectations. This favorable economic environment has raised hopes for a smooth landing for the Fed, prompting a decrease in bets on rate cuts and bolstering the dollar. However, continued reductions in borrowing costs by the Fed could ultimately lead to a weakening of the greenback. This week, market watchers will closely monitor US inflation figures, which are crucial in shaping the Fed’s future policy decisions.
Yen remains fragile after recent developments
The yen, on the other hand, exhibited slight strength on Monday but remained fragile following remarks by Ishiba last week. The new Japanese Prime Minister’s announcement that the country’s economy is not yet ready for additional rate hikes dashed hopes for any imminent changes in interest rates.
USD/JPY technical outlook
The technical analysis for USD/JPY indicates a significant breakout from a bullish channel after a strong rally, surpassing the 147.01 resistance level and moving well above the 30-SMA indicator. The RSI reached the overbought zone before retracing slightly. This breakout suggests a surge in bullish momentum, potentially leading to further upward movement, although a retest of the previously breached channel resistance may occur before targeting the 150.01 level.
Source : www.forexcrunch.com