USD/JPY clings to modest daily gains below 110.00 in choppy day
- USD/JPY is edging modestly higher at the start of the week.
- US bond market is closed due to Labor Day holiday.
- US Dollar Index stays in the positive territory following Friday's decline.
The USD/JPY pair turned south on Friday and ended up closing the week little changed below 110.00. With the greenback gathering some strength on Monday, the pair edged slightly higher and was last seen posting small daily gains at 109.83.
The August jobs report from the US showed on Friday that Nonfarm Payrolls rose by 235,000 in August. This reading missed the market expectation of 750,000 by a wide margin and caused the USD to weaken against its rivals. The US Dollar Index (DXY) closed the fourth trading day in the negative territory and touched its lowest level since early August at 91.94.
However, the DXY managed to stage a correction in the absence of significant fundamental developments on Monday and was last seen rising 0.15% at 92.25.
Nevertheless, USD/JPY is expected to move sideways in the remainder of the day due to the fact that US financial markets will be closed on the Labor Day holiday.
USD/JPY near-term outlook
UOB Group analysts think that USD/JPY will stay in a consolidation phase in the short term.
"Downward pressure appears to have eased and USD is unlikely to weaken further. For today, USD is likely to consolidate and trade within a 109.55/110.00 range," analysts said. "USD is still in consolidating and it could continue to trade within a 109.30/110.55 range for now.”
USD/JPY: Consolidation poised to remain so far – UOB.
Technical levels to watch for