• A goodish pickup in the US bond yields helps build on overnight rebound.
• Stability in equity markets dent JPY’s safe-haven and remain supportive.
The USD/JPY pair built on the overnight rebound from sub-112.00 level and traded with a positive bias for the third session in the previous four.
A fresh leg of a selloff in the US equity markets on Thursday benefitted the Japanese Yen's safe-haven status and prompted some aggressive selling around the major. The global flight to safety, reinforced by a sudden drop in the US Treasury bond yields, was seen as one of the key factors behind the pair's sharp intraday retracement of nearly 90-pips from a one-week high level of 112.73.
The pair, however, showed some resilience below the 112.00 handle, with the prevailing bullish sentiment surrounding the US Dollar helping the pair to rebound around 25-pips from daily lows. The up-move extended through the early European session on Friday and was now supported by some renewed uptick in the US bond yields.
This coupled with a combination of negative factors exerted some additional downward pressure on the Japanese Yen and remained supportive of the positive momentum. Comments by the BoJ Governor Haruhiko Kuroda, saying that it remains vital to continue easing persistently, undermined the Japanese Yen and remained supportive of the positive momentum.
The pair got an additional boost following a mildly positive opening across European equity markets, pointing to some initial signs of stability in the global financial markets and which tends to dent demand for perceived/traditional safe-haven assets/currencies.
It would now be interesting to see if bulls are able to maintain their dominant position or the pair once again fails to make it through the 112.65-70 horizontal supply zone amid relatively thin US economic docket, featuring the release of existing home sales data later during the early North-American session.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: “A convincing break above 112.73 would signal a continuation of the recovery rally toward 113.18.”
“On the other hand, only a daily close below the ascending trendline would validate the bearish outside-day and open the doors to a deeper drop toward 110.88 (200-day EMA),” he further added.
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
EUR/USD holds above 1.0600 as focus shifts to Powell speech
EUR/USD fluctuates in a narrow range above 1.0600 on Tuesday as the better-than-expected Economic Sentiment data from Germany helps the Euro hold its ground. Fed Chairman Powell will speak on the policy outlook later in the day.
GBP/USD stays below 1.2450 after UK employment data
GBP/USD trades marginally lower on the day below 1.2450 in the early European session on Tuesday. The data from the UK showed that the ILO Unemployment Rate in February rose to 4.2% from 4%, weighing on Pound Sterling.
Gold price remains depressed near $2,370 amid bullish USD, lacks follow-through selling
Gold price (XAU/USD) attracts some sellers during the early part of the European session on Tuesday and reverses a major part of the overnight recovery gains from the $2,325-2,324 area, or a multi-day low.
XRP struggles below $0.50 resistance as SEC vs. Ripple lawsuit likely to enter final pretrial conference
XRP is struggling with resistance at $0.50 as Ripple and the US Securities and Exchange Commission (SEC) are gearing up for the final pretrial conference on Tuesday at a New York court.
Canada CPI Preview: Inflation expected to accelerate in March, snapping two-month downtrend
The Canadian Consumer Price Index is seen gathering some upside traction in March. The BoC deems risks to the inflation outlook to be balanced. The Canadian Dollar navigates five-month lows against the US Dollar.