USD/JPY – bullish bias – (101.50-103.50)
Recently the upward pressure on the yen has eased thanks to DM government bond yields rising. A positive NFP report tomorrow would support USD/JPY buying further and USD/JPY could try to reach the 103-level.
However, fundamentally DM government bond underlying demand remains strong and suggests limited scope for USD/JPY above the 103.5-level.
The US and Japan yield gap narrowing may support JPY buying tentatively if the payrolls report disappoints and we believe the lower bound is likely to be around the 101.50-level.