USD/JPY: Bulls attack 110.00 amid firmer USD ahead of US NFP

• USD/JPY refreshes weekly top during a three-day uptrend from late May levels.
• Japan’s Nikkei 225, US Treasury yields stay mildly bid, S&P 500 Futures step back from record top.
• Market sentiment dwindles amid a light macro, stimulus optimism favor bulls of late.
• Japanese Leading Economic Index for June can offer intermediate direction ahead of US jobs report for July.

USD/JPY takes the bids near 109.87, up 0.10% intraday, as markets in Tokyo open for Friday’s trading. The yen pair renews the weekly high amid cautious optimism but the pre-NFP sentiment challenges the momentum traders.

The quote crossed 100-DMA the previous day, for the first time in the week, as market mood improves on stimulus talks. In addition to the chatters that the US Senators are up for passing the much-awaited infrastructure spending plan, surprisingly positive US employment claims report also favored risk barometer pair. At home, the latest Overall Housing Spending and Labor Cash Earnings for June were downbeat and added to the Japanese yen’s (JPY) weakness.

On the contrary, covid woes and cautious sentiment ahead of the US employment data for July challenge the pair buyers. As per the latest updates from Japan’s Kyodo News, “Daily coronavirus cases confirmed in Tokyo reached a record 5,042 on Thursday, topping the 5,000 mark for the first time, the metropolitan government said, as a resurgence of the virus places a strain on the medical system in Japan.”

Additionally, covid numbers from the US, around six-month high, as well as those from China and Australia, also doubt the Fed policymakers’ refrain from accepting the Delta covid variant-led challenges to the economic recovery.

Amid these plays, US stock futures and Japan’s Nikkei 225 stay on the positive side whereas the US 10-year Treasury yields added 1.1 basis points (bps) after rising the most in 12 days on Thursday.

The preliminary readings of Japan’s Leading Economic Index for June, expected 102.7 versus 102.6 prior, may join qualitative catalysts to offer near-term direction to the USD/JPY prices. However, major attention will be given to the US Nonfarm Payrolls (NFP) data.

Read: Read: Nonfarm Payrolls Preview: Why the dollar could surge in (almost) any scenario

Technical analysis

Although sustained break of 100-DMA, around 109.60, favors USD/JPY buyers, a descending trend line from July 01 guards the quote’s immediate upside near 110.00 round figure.