USD/JPY: algos pointing long and risk-on markets say so too

Currently, USD/JPY is trading at 111.65, up 0.25% on the day, having posted a daily high at 111.68 and low at 111.29.

Nikkei tops 20K for the first time since December 2015

USD/JPY is higher in a risk-on environment following in the footsteps of Wall Street overnight. The Nikkei is making fresh highs as was the S&P 500. The DXY is up and the yield spreads have widened again, despite concerns of a less inflationary outlook this week.

US Non-Farm Payroll: City Index model predicts a reading of 181k

The data from the US was positive and if it is a prelude to nonfarm payrolls, the dollar could find further support proving to be resilient to concerns that the Fed may not be in a position to hike rates later in the year. However, much is already priced into the dollar and the possibility of a June Fed hike, so much will now depend on the market's appetite for banking on further improvements in the US economy. On that note, the Atlanta Fed's forecast for GDP Q2 was raised to 4% today.

USD/JPY levels

USDJPY – Struggling to pick a direction but longer term ALGOs pointing long

Valeria Bednarik, chief analyst at FXStreet explained that the 4 hours chart stands in positive territory. "Still, the price remains below its moving averages, and more relevant, the 112.00 level, the 38.2% retracement of the mentioned rally and where the pair met selling interest last week. The US Nonfarm Payroll report will need to surprise big towards the upside to be able to push the pair beyond this last."