USD/JPY struggles near session lows, around 110.75 region on softer US macro data
|- USD/JPY eroded a major part of the overnight gains to the highest level since March 2020.
- Mixed signals on the US inflation kept the USD bulls on the defensive and exerted pressure.
- An uptick in the US bond yields might help limit the downside, despite softer US macro data.
The USD/JPY pair maintained its offered tone through the early North American session and was last seen hovering near daily lows, around the 110.80-75 region.
Having struggled to find acceptance above the 111.00 mark, the USD/JPY pair witnessed some selling on Thursday and for now, seems to have stalled its recent move up to the highest level since March 2020. The pullback was exclusively sponsored by a modest US dollar weakness, which remained on the defensive after mostly softer US macro releases.
The final GDP report confirmed that the US economy expanded by a 6.4% annualized pace during the first quarter of 2021, matching the preliminary estimates. Separately, Durable Goods Orders and Initial Weekly Jobless Claims fell short of market expectations. This, along with mixed signals on the US inflation acted as a headwind for the USD.
That said, the underlying bullish sentiment in the financial markets – as depicted by indications of a strong opening in the US equity markets – undermined the safe-haven Japanese yen. This, in turn, was seen as a key factor that held traders from placing any aggressive bearish bets around the USD/JPY pair and might help limit the downside.
Hence, it will be prudent to wait for some strong follow-through selling before confirming that the recent positive move witnessed over the past two months or so has run out of steam. This will set the stage for some meaningful corrective slide and drag the USD/JPY pair back towards challenging the key 110.00 psychological mark.
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.