In recent weeks, beginning from the middle of July, the Japanese yen was trying to regain back some of its losses and even touched the 130 against USD, from its historical low of 139.40 seen on July 14.
The main reason for the Yen demand's return was the US bond Yields. US 10-year bond yields touched 2.572% on August first and the same day, USDJPY tested 130.40, it's almost two months low.
US 10-year bond Yields jumped above 2.85%
The latest US inflation numbers reinforced the idea that inflation might have peaked, which led to less likely austerity policies by FED, therefore bond yields also decreased and USD as well. At the same time, while major central banks increased and are still increasing their interest rates, the Bank of Japan decided not to join other major central banks in lifting rates, as inflation is not a Japanese concern, yet. So, BOJ kept its ultra-loose monetary policy unchanged, which paused the USDJPY's bears to fall lower.
Today's US employment numbers changed the stories.
Such great numbers that we saw in the NFP report, for sure will create enough reasons for the Federal Reserve to continue its aggressive policies and increase the rates by another 75 bps.
This outlook and market expectation lifted the USD demand. After US data, DXY bulls returned and the US dollar index gained almost 1% from its daily low. For now, as long as we do not have any other catalyst to stop the FED from higher rate hikes, USD still will be in demand, and USDJPY back in its overall uptrend. From the technical point of view, 130 is the key support, and the downtrend needs to breach this level at first.