USD/JPY clings to gains near one-week tops, comfortably above 108.00 mark


  • A combination of factors assisted USD/JPY to gain traction for the second straight day.
  • The risk-on mood, dovish BoJ undermined the safe-haven JPY and remained supportive.
  • A modest uptick in the US bond yields benefitted the USD and provided an additional lift.

The USD/JPY pair held on to its intraday gains through the early European session and was last seen hovering near the 108.20-25 region.

The pair edged higher for the second straight session and climbed to a one-week high level of 108.38 during the first half of the trading action on Tuesday. The underlying bullish tone in the financial markets undermined demand for the safe-haven Japanese yen. Bulls further took cues from a modest uptick in the US Treasury bond yields, which extended some support to the US dollar and provided an additional lift to the USD/JPY pair.

The supporting factors, to a larger extent, were offset by worries that soaring COVID-19 infections in India and Japan could derail the global economic recovery. The pair lacked any strong follow-through buying and witnessed a modest pullback after the Bank of Japan (BoJ) announced its monetary policy decision. As was anticipated, the BoJ left the benchmark interest rate unchanged at -10bps at the conclusion of its monetary policy review meeting on Tuesday.

Additionally, the Japanese central bank maintained its pledge to buy J-REITS at an annual pace of up to ¥180 billion and clarified that the 10-year JGB yield may move up or down 0.25% around its 0% target. The BoJ also altered the ETF buying limits and removed the lower ceiling of ¥6 trillion ($55 billion) while keeping an upper limit of ¥12 trillion.

In the quarterly economic forecasts, the BoJ took a more optimistic view of the growth outlook and raised its growth forecast for the fiscal year started this month to 4% from 3.9%. At the same time, the bank lowered its price forecast for this year to 0.1%, reaffirming that it won't be changing the accommodative monetary policy stance in the foreseeable future. This was reinforced by the BoJ Governor Haruhiko Kuroda's comments at the post-meeting press conference.

Kuroda said that the 2% inflation target can be achieved by patiently continuing the powerful monetary easing. This, in turn, continued weighing on the JPY and remained supportive of the bind tone surrounding the USD/JPY pair. That said, bulls might still wait for a sustained move beyond mid-108.00s before positioning for any further appreciating move.

Technical levels to watch

USD/JPY

Overview
Today last price 108.25
Today Daily Change 0.16
Today Daily Change % 0.15
Today daily open 108.09
 
Trends
Daily SMA20 109.22
Daily SMA50 108.32
Daily SMA100 106.15
Daily SMA200 105.74
 
Levels
Previous Daily High 108.2
Previous Daily Low 107.64
Previous Weekly High 108.84
Previous Weekly Low 107.48
Previous Monthly High 110.97
Previous Monthly Low 106.37
Daily Fibonacci 38.2% 107.99
Daily Fibonacci 61.8% 107.86
Daily Pivot Point S1 107.76
Daily Pivot Point S2 107.42
Daily Pivot Point S3 107.2
Daily Pivot Point R1 108.31
Daily Pivot Point R2 108.53
Daily Pivot Point R3 108.87

 

 

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