USD/JPY rises above 114.00 for first time since May

USD/JPY broke above 114.00 and rose to 114.17, reaching the highest level since May. The pair remains near the highs, holding a strong bullish tone. 

Stocks up, bonds down

The move above 114.00, probably trigger some stops and boosted the pair further to the upside. Now is looking at May’s highs at 114.35/40. 

The yen is the worst performer of the American session weakened by rising equity prices and a decline in US bonds. The Dow Jones is up 0.38% while the Nasdaq gains 0.97%. The 10-year yield rose 2.398%, the highest in almost two months. 

Equity prices started to move to the upside after the US employment report. The headline number was offset by wage growth. Non-farm payrolls increase by 222K (vs 179K) but average hourly earnings rose 0.2% (below the 0.3% expected).  The unemployment rate ticked higher from 4.3% to 4.4% (the Labor Participation rate also rose). 

US: Total nonfarm payroll employment increased by 222,000 in June

Recently, the Federal Reserve released the Monetary Policy Report, that Janet Yellen will present next week to Congress. The Fed sees long-run inflation stable with some measures low by historical standards.  The document showed that the Fed sees only moderate vulnerabilities in the financial system. 

Fed: Consumer spending appears to have rebounded recently - MonPol Report

Levels to watch

USD/JPY is moving with a strong bullish tone. If it continues to rise it will reach 114.36, the high of May. Above, it would be trading at the highest since March. Resistance levels might lie at 114.50 and 114.80. On the flip side, 113.85 (Asian session high) is now the immediate support followed by 113.65 (20-hour moving average) and 113.45 (Jul 7 high).