- A combination of factors prompted some fresh selling around USD/JPY on Monday.
- Sliding US bond yields kept the USD bulls on the defensive and exerted some pressure.
- The risk-off mood benefitted the safe-haven JPY and also contributed to the selling bias.
- The Fed’s surprise hawkish shift acted as a tailwind and helped limit any further losses.
The USD/JPY pair dropped to one-week lows, around the 109.70 region during the Asian session, albeit recovered few pips thereafter. The pair was last seen trading just below the key 110.00 psychological mark, down nearly 0.20% for the day.
Following the previous session's good two-way price moves, the USD/JPY pair met with some fresh supply on the first day of a new trading week and pressured by a combination of factors. This marked the second day of a negative move in the previous three and dragged the pair further away from two-and-half-month tops, touched in reaction to the Fed's sudden hawkish shift.
The prevalent risk-off mood – as depicted by a generally weaker tone around the equity markets – underpinned the safe-haven Japanese yen and exerted some pressure on the USD/JPY pair. Bearish traders further took cues from the ongoing slide in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond dropped to the lowest level since February.
On the other hand, the US dollar consolidated the post-FOMC strong gains and did little to provide any meaningful impetus to the USD/JPY pair. However, the Fed's surprise move to bring forward its timetable for the first post-pandemic interest rate hikes continued acting as a tailwind for the USD. This, in turn, helped limit any deeper losses for the major, at least for now.
There isn't any major market-moving economic data due for release from the US on Monday. Hence, the US bond yields will play a key role in influencing the USD price dynamics. Apart from this, traders might further take cues from the broader market risk sentiment to grab some short-term opportunities around 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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD tumbles toward 0.6350 as Middle East war fears mount
AUD/USD has come under intense selling pressure and slides toward 0.6350, as risk-aversion intensifies following the news that Israel retaliated with missile strikes on a site in Iran. Fears of the Israel-Iran strife translating into a wider regional conflict are weighing on the higher-yielding Aussie Dollar.
USD/JPY breaches 154.00 as sell-off intensifies on Israel-Iran escalation
USD/JPY is trading below 154.00 after falling hard on confirmation of reports of an Israeli missile strike on Iran, implying that an open conflict is underway and could only spread into a wider Middle East war. Safe-haven Japanese Yen jumped, helped by BoJ Governor Ueda's comments.
Gold price jumps above $2,400 as MidEast escalation sparks flight to safety
Gold price has caught a fresh bid wave, jumping beyond $2,400 after Israel's retaliatory strikes on Iran sparked a global flight to safety mode and rushed flows into the ultimate safe-haven Gold. Risk assets are taking a big hit, as risk-aversion creeps into Asian trading on Friday.
WTI surges to $85.00 amid Israel-Iran tensions
Western Texas Intermediate, the US crude oil benchmark, is trading around $85.00 on Friday. The black gold gains traction on the day amid the escalating tension between Israel and Iran after a US official confirmed that Israeli missiles had hit a site in Iran.
Dogwifhat price pumps 5% ahead of possible Coinbase effect
Dogwifhat price recorded an uptick on Thursday, going as far as to outperform its peers in the meme coins space. Second only to Bonk Inu, WIF token’s show of strength was not just influenced by Bitcoin price reclaiming above $63,000.