USD/JPY remains confined in a range, consolidates around 136.00 mark ahead of Powell
|- USD/JPY lacked any firm directional bias and consolidated its recent gains to a multi-day high.
- Recession fears benefitted the safe-haven JPY and capped gains amid sliding US bond yields.
- Modest USD strength acted as a tailwind as the focus remains on Fed Chair Powell’s speech.
The USD/JPY pair oscillated in a narrow trading range on Wednesday and consolidated its recent gains recorded over the past three sessions. Spot prices moved back above the 136.00 mark during the early European session, with bulls eyeing a multi-day peak touched the previous day.
The US dollar built on the overnight strong move up and gained some follow-through traction during the early part of trading on Wednesday. This, along with the divergent monetary policy stance adopted by the Bank of Japan and the Federal Reserve, acted as a tailwind for the USD/JPY pair. That said, a combination of factors held back bulls from placing aggressive bets and kept a lid on any meaningful upside for spot prices.
The market sentiment remains fragile amid concerns that a more aggressive move by major central banks to curb soaring inflation would pose challenges to the global economic recovery. This, in turn, offered support to the safe-haven Japanese yen. The flight to safety triggered a fresh leg down in the US Treasury bond yields, which narrowed the US-Japan rate differential and further collaborated to capping gains for the USD/JPY pair.
Traders also seemed reluctant and preferred to move on the sidelines ahead of Fed Chair Jerome Powell's speech at the ECB forum in Sintra, due later during the North American session. Investors will look for fresh clues about the Fed's policy tightening path, which will play a key role in influencing the near-term USD price dynamics. This, in turn, will help investors to determine the next leg of a directional move for the USD/JPY pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.