USD/JPY's rally on Friday's above-forecast U.S. non-farm payrollsproved short-lived, establishing its daily range -- and fresh 2021 high -- in the half-hour bar immediately after the release, then settling at the lower end of that band as traders saw no reason to accelerate recent dollar gains.
USD/JPY hit its 2021 high immediately after the release, rising from 111.47 to 111.65 before dollar bears sold it down to 111.15 after determining that the data was not enough pull forward U.S.
asset taper and rate hike expectations.
Still, the outlook for the dollar remains ebullient as the U.S. recovery continues to lead, with inoculation levels high.
While significant pandemic-related joblessness lingers -- with 6.8 million fewer people employed than in February 2020 -- the expiry of enhanced benefits by September 2021 could reduce that, facilitating U.S.
asset purchase taper and eventually rate hikes.
Concurrently, Japanese accommodation is expected to remain in-place in the near-term.
With U.S.-Japan accommodation prospects diverging, USD/JPY is poised for further gains, eyeing March 2020's 111.72 and then April 2019's 112.40.
Should the Fed begin taper talk in earnest, March 2017 highs by 115.51 will come into sharp focus.
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