Insights 
VT 
Key Points:
- USD/JPY extends gains as strong US data boosts the dollar and Treasury yields.
- US labour data ease fears of a labour-market slowdown.
- The Yen stays under pressure as China–Japan tensions persist and wage growth remains subdued.
The Japanese yen retreats from earlier strength against the US dollar on Thursday as the dollar advances across the board following recent US releases. USD/JPY trades near 157.160 at the time of writing, climbing for a third day running.
Figures released by the US Department of Labor indicated that initial jobless claims rose modestly to 208,000 in the week to 3 January, coming in just under forecasts of 210,000 and up from the previous week’s revised 200,000.
Meanwhile, the yen is seeing mild pressure as frictions with China intensify. Beijing has introduced restrictions on exports of “dual-use” items to Japan, citing national security, and has initiated an anti-dumping investigation into dichlorosilane imported from Japan, which is used in semiconductor production.
Technical Analysis
USD/JPY is currently trading above 157.000, and the moving averages are beginning to align in favour of a bullish trend. However, the gaps between the averages remain narrow, suggesting that bullish momentum is not yet strong enough.
Candlesticks are becoming more pronounced, which is encouraging for buyers, as price action is holding firmly above the 157.000 psychological level — now acting as support. If the pair can remain above 157.000, it is likely to continue pushing towards higher levels.
The MACD signal line is currently above the 50 level, and the histogram is printing bullish bars. With both the moving averages and the MACD pointing higher, conditions are aligning in favour of a bullish trend — an advantage for traders looking to take long positions.
Cautious Outlook as NFP Data Awaits
The US will release the December NFP report, with payrolls expected to rise by 60,000 and the unemployment rate seen at 4.5%. A stronger print could lift the US dollar and Treasury yields by reinforcing a higher-for-longer Fed outlook, while a weaker result may weigh on the dollar. Markets will also watch wage growth and any revisions.
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