- A combination of factors failed to assist USD/JPY to capitalize on its modest uptick.
- Diminishing odds for an earlier Fed rate hike kept the USD bulls on the defensive.
- A softer risk tone benefitted the safe-haven JPY and collaborated to cap the major.
The USD/JPY pair struggled to capitalize on its modest intraday uptick and was last seen hovering around the 111.00 mark heading into the European session.
The pair stalled the previous session's post-NFP retracement slide from 15-month tops and edged higher during the first half of the trading action on Monday. The uptick, however, lacked any strong follow-through and remained capped amid a subdued US dollar price action.
The details of the US jobs report calmed fears of an earlier Fed rate hike and acted as a headwind for the greenback. The headline NFP print showed that the US economy added 850K jobs in June, though the big beat was offset by an unexpected rise in the unemployment rate.
On the other hand, a softer risk tone extended some support to the safe-haven Japanese yen and further collaborated towards capping the USD/JPY pair. Investors also seemed reluctant to place any aggressive bets amid thin liquidity conditions on the back of a holiday in the US.
Moving ahead, the focus now shifts to the release of the FOMC meeting minutes, which will be looked upon for clues about the central bank's monetary policy outlook. This will play a key role in driving the USD in the near term and provide a fresh impetus to the USD/JP pair.
In the meantime, the broader market risk sentiment will continue to influence the USD/JPY pair and allow traders to grab some short-term opportunities. That said, the momentum is likely to be limited as investors might prefer to wait on the sidelines ahead of the key event risk.
