USD/JPY hits weekly lows near 103.40 and rebounds
|- Japanese yen gains momentum despite risk appetite.
- A weaker US dollar sends USD/JPY to the downside.
- Joe Biden becomes US President, delivers inaugural speech.
The USD/JPY broke under 103.60 and tumbled to 103.43, reaching the lowest level in almost two weeks, on the back of a decline of the US dollar. The pair then rebounded modestly rising back above 103.50.
The yen gained momentum across the board even as Wall Street indexes trade at record highs and as US yields remained in recent ranges. In the US Joe Biden sworn in as President. He is delivering his inaugural speech. He is expected to sign later today his first executive orders, undoing some Trump’s policies.
The US dollar failed to hold to gains. The DXY climbed to 90.65 and then pulled back to 90.42, trading modestly lower for the day. The key driver in the DXY has been the decline of EUR/USD.
On Thursday, the Bank of Japan will announce its decision on monetary policy. The central bank is expected to maintain rates on hold at -0.1%. The focus will be on the yield curve control, which aims to maintain the 10-year JGB yield target at around 0.00%. “Last month the BoJ launched another review of monetary policy, the results of which are expected in March. Speculation has been rising as to what changes this could bring. One impact is that this week’s regular policy meeting is unlikely to bring any fresh policy changes”, mentioned analysts at Rabobank.
USD/JPY Short-term outlook
The USD/JPY tested levels under the key support at 103.50/55, a horizontal level and the 20-day simple moving average. A daily close below would suggest weakness ahead for the US dollar, exposing 103.00.
The bias in the short-term points to the downside, but if it recovers 103.60, it would be back in the recent range.
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