USD/JPY spikes to fresh session tops, further beyond mid-106.00s
- USD/JPY caught some fresh bids during the early North American session.
- The NFP report showed that the US economy shed 20.5 million jobs in April.
- The unemployment rate shot to 14.7%, albeit failed to provide any impetus.
The USD/JPY pair finally broke out of its consolidative trading range and spiked to fresh session tops, around the 106.65 region in the last hour.
Following the previous day's attempted recovery move from multi-week lows, the pair was confined in a narrow trading band through the early North-American session. A combination of diverging forces failed to provide any meaningful impetus and led to a subdued trading action on the last day of the week.
The US dollar remained on the defensive amid speculations that the Fed might be forced to push interest rates below zero. The USD bulls failed to gain any respite after the NFP report showed that the US economy shed a record 20.5 million jobs in April and the unemployment rate shot to 14.7.
Meanwhile, the downside remained cushioned amid the prevalent risk-on mood, which tends to undermine demand for the Japanese yen's perceived safe-haven demand. The global risk sentiment remained supported by the latest optimism over the re-opening of economies in some parts of the world.
The upbeat market mood got an additional boost on reports that US-China phase one trade deal remains on track despite a spat over the origin of the coronavirus. It is worth recalling that the US President Donald Trump had threatened to terminate the trade deal and impose fresh tariffs on Chinese goods in retaliation to its cover-up and mishandling of the virus outbreak at the early stage.
Meanwhile, the latest leg of a sudden spike of around 45-50 pips has now lifted the pair above 200-hour SMA and back within the striking distance of weekly tops. Some follow-through buying might now assist the pair to aim back towards reclaiming the 107.00 round-figure mark.
Technical levels to watch