#USDJPY @ 128.580 has dropped to near 128.50 as the USD Index is struggling to extend gains above 101.55. (Pivot Orderbook analysis)

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• USD/JPY has dropped to near 128.50 as the USD Index is struggling to extend gains above 101.55.
• Subdued US corporate earnings have strengthened the risk-off market mood.
• US Secretary of State Antony Blinken to meet with Chinese President Xi Jinping for a “new phase of stepped-up engagement”.

The pair currently trades last at 128.580.

The previous day high was 129.13 while the previous day low was 128.08. The daily 38.2% Fib levels comes at 128.49, expected to provide support. Similarly, the daily 61.8% fib level is at 128.73, expected to provide resistance.

The USD/JPY pair has refreshed its day’s low at 128.50 as the US Dollar Index (DXY) has sensed barricades after testing Thursday’s high around 101.55 in the Asian session. The asset is expected to display volatile moves ahead as investors are getting anxious ahead of the release of the United States Nonfarm Payrolls (NFP) data.

S&P500 futures have extended their losses amid unimpressive earnings by US corporate, portraying a risk-off market mood. The three-day winning spell by the 500-US stock basket futures has terminated for now. Bullish action shown by the USD Index is facing exhaustion after reaching near 101.55, however, the upside bias is intact.

Contrary to the risk-aversion theme, the demand for US government bonds is accelerating vigorously amid deepening signs of inflation softening. The 10-year US Treasury yields have dropped further below 3.37%.

Investors are keenly awaiting the release of the US NFP data for further guidance. According to the estimates, the US economy has added fresh 185K jobs vs. the former release of 223K. The United States labor market is resilient as the demand for labor force is exceeding expectations. Therefore, the employment cost index data could deliver a surprise release ahead. The Unemployment Rate is expected to display an escalation to 3.6% from the prior release of 3.5%.

The headlines conveying US Secretary of State Antony Blinken’s meeting with Chinese President Xi Jinping in Beijing could provide strength to the risk-on mood. This could be a “new phase of stepped-up engagement” between the two countries, after further complications to diplomatic relations arising from the Covid-19 pandemic, as reported by Financial Times.

On the Japanese Yen front, Jibun Bank Services PMI (Jan) dropped marginally to 52.3 from the former release of 52.4.

Meanwhile, former Bank of Japan (BOJ) Deputy Governor Hiroshi Nakaso has taken up a post heading a financial conference under the Asia-Pacific Economic Cooperation (APEC) advisory council as reported by Reuters. Former BoJ Deputy Governor is seen as a leading contender to take over incumbent Haruhiko Kuroda, whose term ends on April 8.

Technical Levels: Supports and Resistances

USDJPY currently trading at 128.54 at the time of writing. Pair opened at 128.75 and is trading with a change of -0.16 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 129.91, 50 SMA 132.97, 100 SMA @ 138.9 and 200 SMA @ 136.78.

The previous day high was 129.13 while the previous day low was 128.08. The daily 38.2% Fib levels comes at 128.49, expected to provide support. Similarly, the daily 61.8% fib level is at 128.73, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 128.18, 127.61, 127.13
• Pivot resistance is noted at 129.23, 129.71, 130.28

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