USD/JPY Outlook: Fewer jobless claims boost dollar

• US jobless claims figures showed a drop to 233,000.

• Despite signs of weakness, the US labor market remains resilient.

• Thursday’s BoJ minutes showed a louder tone among policymakers.

The outlook for USD/JPY is upbeat as the greenback recovers from upbeat US employment numbers. Meanwhile, the yen extended losses as recent recession worries eased and risk appetite improved.

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On Thursday, the US released jobless claims figures showing a drop to 233,000, the most significant drop in nearly a year. Economists had expected 240,000 claims. The figures eased fears that the labor market was deteriorating rapidly. Last week, data showed a massive increase in the unemployment rate, sparking fears of a slowdown. This panic boosted the yen, considered a haven in times of uncertainty.

However, calm returned later as data showed other sectors of the US economy remained resilient. The dollar traded near a four-month low as expectations for a Fed rate cut rose. However, this decline has stopped as market turbulence has eased. Despite signs of weakness, the labor market remains resilient. However, last week’s report was a catalyst for the Fed to start lowering borrowing costs to avoid another downward trend in the sector.

Meanwhile, the yen has remained vulnerable since the Bank of Japan’s deputy governor dashed hopes for a near-term rate hike. He called for a break due to recent volatility in global markets. Meanwhile, BoJ minutes on Thursday showed a more dovish tone, increasing uncertainty over the central bank’s policy outlook.

Key USD/JPY Events Today

It could be a slow end to the week as investors do not expect key reports from Japan or the US.

USD/JPY Technical Outlook: Bulls hold above 30-SMA

Technically, USD/JPY is trading above 30-SMA and RSI is above 50, indicating an uptrend. This change comes after the price reversed at the 142.56 level. Here, the price was deeply oversold, allowing the bulls to re-emerge.

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The new direction above the SMA will allow the price to review the 150.03 resistance level. If it breaks above, it will hit the 155.01 resistance. However, there is also a chance that this is just a deep pullback before the price reverses to the downside. However, the bears will only return if the price falls below the 30-SMA. Otherwise, USD/JPY will start making higher highs and lows.

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