USD/JPY hit two months highs, faces resistance at 137.00

• US yields keep rising after a fresh round of US economic data.
• Japanese Yen continues to be among the weakest currencies.
• USD/JPY with a bullish bias, testing 100 and 200-day SMAs.

The USD/JPY jumped to 137.08 following the release of US economic data on Thursday, reaching the highest level since December 20. The pair failed to hold above 137.00 and is hovering around 136.60.

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Data released on Thursday showed Initial Jobless Claims for the week ended February 24 dropped to 190K, better than the 195K of market consensus. Non-farm productivity during the fourth quarter was revised lower from 3% to 1.7% while Unit Labor Costs were revised from 1.1% to 3.2%. Federal Reserve Governor Christopher Waller and Minneapolis Fed President Neel Kashkari will speak later on Thursday.

US economic figures add to the new scenario of a tight labor market and persistent inflation. The context adds pressure to the Fed and increases expectations of higher interest rates for longer. As a response, US yields moved further north. The 10-year US yield hit 4.08%, the highest since November, and the 2-year hit 4.93%, the highest since 2007.

The Japanese Yen is the worst performer over the last five days across the G10 space, followed closely by the Australian Dollar. Higher bond yields across the globe as inflation shows signs of persistence are weighing on the Yen. On Thursday is having a mixed performance amid a deterioration in market sentiment.

A critical area ahead for USD/JPY bulls

The USD/JPY faces a strong resistance area around 137.00, the confluence of a round number, and the 100 and 200-days Simple Moving Averages. A daily close above would open the doors to more gains toward the next relevant area at 138.00/10 (November highs).

The momentum favors the US Dollar, particularly after the quick rebound on Wednesday from 135.25. However, a failure to make a run above 137.00 over the next sessions would increase the odds of a bearish correction.

USD/JPY daily chart

Technical levels