USD/JPY soars to new highs after strong US jobs data dampens rate cut hops

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• USD/JPY climbs over 0.90% to 148.05 after strong US jobs report and higher Treasury yields.
• January's 353K job additions lessen Fed rate cut forecasts, indicating a tighter labor market.
• Rises in US 10-year Treasury yield and Dollar Index signal robust confidence in the US economy.
• Anticipation of BoJ ending negative rates complicates USD/JPY outlook, eyes on March meeting.

The USD/JPY bounces from around the 146.00 handle and prints a new three-day high at 148.05 after a strong US Nonfarm Payrolls report pushed aside Federal Reserve’s rate cut speculations amongst the investment community. At the time of writing, the major exchanges hands at 147.77, gains more than 0.90%.

USD/JPY leaps as strong employment figures reinforce US Dollar strength, eyes on BoJ's next move

US Nonfarm Payrolls data was outstanding, with the economy creating 353K new jobs, crushing forecasts of 180K, and above December’s numbers upward revised from 216K to 333K. The Unemployment Rate was flat compared to last month's data at 3.7%, while Average Hourly Earnings (AHE) rose. Monthly AHE came at 0.6%, up from 0.4%, and year-over-year clocked 4.5%, up from 4.4%.

Following the report, the US 10-year Treasury note yield, which closely correlates with the USD/JPY pair, soared from around 3.90% to 4% and gained more than ten basis points (bps). The US Dollar Index (DXY), which tracks the buck´s value versus a basket of peers, advances 0.67%, up at 103.76, after dipping to a low of 102.90.

Meanwhile, a hawkish tilt by the Bank of Japan (BoJ) has increased the odds for Governor Kazuo Ueda and Co. to end the negative interest rates cycle.  Analysts at Société Générale said, “The yen snapped back from a challenging January after the hawkish read of the BoJ Summary of Opinions at the January meeting. Our base case is for a rate increase and an end to YCC in March. Demand picked up for 3-month downside strikes in USD/JPY.”

Looking forward in the schedule, the US economic calendar is set to include the release of the University of Michigan Consumer Sentiment as well as Factory Orders.

USD/JPY Technical Levels

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• Source: https://www.fxstreet.com/news/usd-jpy-soars-to-new-highs-after-strong-us-jobs-data-dampens-rate-cut-hops-202402021510