USD/JPY – on the font foot for now as Nikkei strengthens on upbeat data

Offered tone around Yen picked up pace, sending USD/JPY mildly higher on the day as Nikkei index advanced following the release of upbeat Japanese labor cash earnings number.

Nears 5-DMA

At 101.31, the spot is trading within a striking distance from its daily 5-MA located at 101.40 levels. The currency pair found bids after Nikkei index turned positive following the release of a data in Japan, which showed Labor Cash Earnings for June rose +1.3% y/y; its first increase for 3 months.

Japanese labour ministry official added that real wages grew 1.8% because the core consumer price index was negative 0.5 percent in June. Rise in wages is something the Japanese officials are targeting through their massive stimulus efforts.

The spot remains at the mercy of the broader market sentiment ahead of the US non-farm payrolls data due for release in the early US session.

USD/JPY Technical Levels

Break above 101.40 (5-DMA) would open doors for 102.11 (61.8% of 98.787-107.494), above which bullish momentum is seen gathering pace, leading to short unwind and a possible rise to 10-DMA seen today at 103.01.

On the lower side, 100.71 (50% of 2011 low – 2015 high) is a strong support, which if breached could yield a drop to 100.00, under which doors are open for a re-test of Brexit day low of 98.787.