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TODAY USDJPY SIGNAL : USDJPY climbs back above 135.00 mark, lacks follow-through amid modest USD weakness

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TODAY USDJPY SIGNAL : USDJPY climbs back above 135.00 mark, lacks follow-through amid modest USD weakness

  • A combination of factors assisted USD/JPY to reverse modest intraday losses on Monday.
  • A positive risk tone undermined the safe-haven JPY amid the Fed-BoJ policy divergence.
  • Weaker USD failed to inspire bullish traders or provide any additional boost to the major.

TODAY USDJPY SIGNAL : The USD/JPY pair attracted some dip-buying on the first day of a new week and has now recovered nearly 60 pips from the daily low, around mid-134.00s. The pair moved back above the 135.00 psychological mark during the early European session and was last seen trading near the top end of its intraday range.

The recent sharp decline in commodity prices helped ease fears about a further rise in inflationary pressures and led to a goodish rebound in the global risk sentiment. This was evident from signs of stability in the financial markets, which undermined the safe-haven Japanese yen and acted as a tailwind for the USD/JPY pair.

The lacklustre demand for safe-haven assets pushed the US Treasury bond yields higher, resulting in the widening of the gap between the US-Japanese bond yields. This, along with a big divergence in the policy stance adopted by the Bank of Japan and the Fed, weighed on the JPY and further extended support to the USD/JPY pair.

TODAY USDJPY SIGNAL : That said, modest US dollar weakness held back traders from placing aggressive bullish bets and capped the upside for the USD/JPY pair, at least for the time being. Hopes that inflation is nearing its peak forced investors to reduce bets for more aggressive rate hikes by the Fed, which, in turn, kept the USD bulls on the defensive.

The mixed fundamental backdrop warrants caution before positioning for any firm near-term direction, though the bias still seems tilted in favour of bullish traders. Market participants now look forward to the US economic docket – featuring the release of Durable Goods Orders and Pending Home Sales later during the early North American session.

Apart from this, the US bond yields will influence the USD price dynamics and provide a fresh impetus to the USD/JPY pair. Traders will further take cues from the broader market risk sentiment to grab short-term opportunities around the major.

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FIRST CAPITALS brand is authorized and regulated in various jurisdictions.

First Capitals Limited (www.First Capitals.com/eu) is regulated by the Cyprus Securities and Exchange Commission with CIF license number 185/12, licensed by the Financial Sector Conduct Authority (FSCA) of South Africa, with FSP No. 46614. The company is also registered with the Financial Conduct Authority of the UK with number 600475.

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Exinity Limited is a member of Financial Commission, an international organization engaged in a resolution of disputes within the financial services industry in the Forex market.

Risk Warning: Trading Forex and Leveraged Financial Instruments involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Trading non-leveraged products such as stocks also involves risk as the value of a stock can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of the FIRST CAPITALS brand based on the legal requirements in his/her country of residence.  Please read FIRST CAPITALS’s full Risk Disclosure.

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