• FOMC-led USD weakness extends through Asian session.
• Global trade was concerns supporting JPY’s safe-haven appeal.
• Break below 105.60-50 area to open room for further downside.
The USD/JPY pair extended its post-FOMC retracement slide and dropped to fresh weekly lows during the Asian session on Thursday.
Bulls were clearly unhappy by the fact that the Fed, in its latest monetary policy update on Wednesday, did not signal a faster monetary policy tightening cycle and stuck to its previous guidance of total three rate hikes in 2018. The disappointment prompted some aggressive US Dollar selling, with the pair reversing from the 106.60-65 supply zone, or one-week tops.
Meanwhile, growing concerns over an upcoming announcement on tariffs from the US President Donald Trump dented investors' confidence and provided an additional boost to the Japanese Yen's safe-haven appeal. The pair fell to fresh weekly lows but once again managed to find some support near the 105.60-55 region.
Currently trading around 105.85-90 band, traders now look forward to the usual weekly initial jobless claims data from the US for some short-term impetus. Meanwhile, the broader market risk sentiment might continue to act as an exclusive driver of the pair's momentum on Thursday.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: “A downside break of the symmetrical triangle would open doors for a drop to 105.00. A violation there would allow Yen bulls to push the spot all the way down to 101.19 - starting point of the trump rally.”
“Meanwhile, on the higher side, a convincing break above the descending 30-day MA (106.67) would add credence to the upside break of the descending trendline and indicate the spot has bottomed out at 105.25. However, only a close above 107.29 (March 13 high) would signal a bearish-to-bullish trend change”, he adds further.
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 jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.