USD/JPY bulls take charge on to 109.00 ahead of nonfarm payrolls

With a higher open in Tokyo on the back of a positive tone on Wall Street, the Yen has slowed up on its three-day advance and USD/JPY spiked to find ground back on the 109 handle for the first time since late European trade. 

USD/JPY was pressured hard from the 110.80 level on the last trading day of May and a bounce from 109.02 on the 1st June met supply in a minor recovery to 109.63/69. We have since been in a strong bearish trend where bulls recovered from 108.51 lows in mixed risk sentiment. Fundamentals apply with the tax hike delays confirmed by Abe this week while markets look to US data for a guide to June's Fed interest rate decisions. 

Fed's Kaplan: Getting near the point where it makes sense to hike in either June or July

The US data has been very mixed, but Fed speakers continue to remain upbeat on Q2 performances and there being an appropriate platform for the Federal Reserve to continue its interest rate normalisation with potential two incremental hikes in 2016 and June or July being the first months to continue the process of normalisation. In respect of events, the nonfarm payrolls are up in the U.S. shift.

US ADP Employment matches estimates - ING

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, the technical indicators have posted modest bounces from extreme oversold readings but remain within negative territory, "Whilst the 200 SMA continues to cap the upside around 109.20. The next directional move with depend on how the market understands US employment data,  but seems unlikely that the pair can now recover above 110.00, even with an upward surprise in jobs' creation and wages."