USD/JPY hovers near weekly highs amid Powell’s comments, US data

• USD/JPY slightly down close to week's high, following Powell's hawkish comments.
• Powell's caution on early rate cuts contrasts with strong US job growth in January.
• Rising US Treasury yields and solid ISM PMIs highlight a robust US economic outlook, supporting the Dollar.
• Despite BoJ's negative rate policy hints, Japan's data suggests ongoing loose monetary stance.

Though virtually unchanged, the USD/JPY trades near the week's highs early during the North American session. The major exchanges hands at 148.55, down 0.08% after hitting a daily high of 148.79.

US Dollar remains solid as Powell pushes against aggressive rate cut bets

Traders are still digesting the subtle hawkish tilt of the US Federal Reserve Chair Jerome Powell. Although it has opened the door to begin easing policy, he said that most officials project three interest rate cuts through 2024. He backpedaled, saying the “danger of moving too soon is that the job’s not quite done.”

Powell’s interview was done on Thursday, ahead of the robust US Nonfarm Payrolls report for January, which witnessed an addition of more than 350K Americans to the workforce. Hence, US Treasury bond yields skyrocketed, pulling the USD/JPY pair from around daily lows of 146.25 toward 148.50s, gaining more than 1.30% or 190 pips.

That, along with robust ISM Manufacturing and Non-Manufacturing PMIs, paints an upbeat economic outlook for the US, augmenting demand for the Greenback.

On the Japanese front, even though the Bank of Japan (BoJ) has signaled that it would end its negative interest rate cycle, data supports the current ultra-loose monetary policy stance. Nevertheless, geopolitical tensions and sudden shifts in market mood could spark demand for the JPY.

Ahead in the day, the US economic docket will feature Fed speakers led by Loretta Mester, Neil Kashkari, and Susan Collins.

USD/JPY Price Analysis: Technical outlook

The USD/JPY daily chart portrays the pair as upward biased, though buyers must reclaim 149.00 if they would like to remain hopeful of challenging 150.00. Conversely, if sellers drag the exchange rate towards the Tenkan-Sen at 147.39, that could open the door to challenge the Senkou Span A at 146.12. Once cleared, the next stop would be the February 1 low of 145.89.