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USD/JPY in Overbought Territory Ahead of the US Jobless Claims Data

USD/JPY has continued to rally as the US treasury yields offer support to the greenback. On Thursday, the benchmark 10-year bond yields are at 1.726. This is close to the over one-year high of 1.77 hit on Tuesday. Subsequently, the DXY, which measures the value of the US dollar against a basket of currencies, is at $93.24. While this is lower than yesterday’s high of about 93.44, it is still at its highest price since November 2020.

At the same time, USD/JPY is reacting to the upbeat figures of the quarterly Tankan survey. According to the Bank of Japan, the large non-manufacturers index for Q1’21 is at -1 compared to the forecasted -5. For the large manufacturers index, the reading of 5 is higher than the predicted -15 and previous quarter’s -10.

Investors are now keen on the US initial jobless claims number, which is scheduled for release later in the day. Analysts expect a reading of 680,000, which is lower than the previous week’s 684,000.   

USD/JPY Technical Outlook

USD/JPY rallying continues after the formation of a bullish flag that spanned for about a month. On a daily chart, it is trading above the 25 and 50-day exponential moving averages. Besides, it has surpassed its 10-month high of 109.83 to its current 110.78. With an RSI of 81, the pair is in the overbought territory.

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USD/JPY is likely to pull back to 109.83 in the near-term, before rising further. On the upper side, the next target will be psychological level of 112.00. If it hits that mark, it will its highest level since February 2020.

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USD/JPY Chart

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