- A combination of diverging forces failed to provide any meaningful impetus to USD/JPY.
- A subdued USD demand kept a lid on the early intraday positive move to three-day tops.
- The risk-on mood, a strong pickup in the US bond yields might help limit any sharp slide.
The USD/JPY pair extended its sideways consolidative price action and remained confined in a range, below mid-105.00s through the early European session.
The prevalent upbeat market mood – as depicted by strong gains in the equity markets – undermined the safe-haven Japanese yen and assisted the USD/JPY pair to gain some traction on the first day of a new week. The uptick pushed the pair to three-day tops, albeit the upside remained limited amid a subdued US dollar demand.
The global risk sentiment remained well supported by reviving hopes for additional US fiscal stimulus measures and expectations of a COVID-19 vaccine by the end of this year. However, nervousness on the US political situation held the USD bulls from placing any aggressive bets and capped the upside for the USD/JPY pair.
Meanwhile, the risk-on flow led to a strong rally in the US Treasury bond yields. This, along with concerns that a steep rise in new coronavirus cases could trigger renewed lockdown measures and prove detrimental for the global economic growth continued lending some support to the greenback's status as the reserve currency.
This makes it prudent to wait for some strong follow-through selling before positioning for any further near-term depreciating move for the USD/JPY pair. On the other hand, a sustained move beyond mid-105.00s will be seen as a fresh trigger for bullish traders and pave the way for a move towards the 106.00 round-figure mark.
There isn't any major market-moving economic data due for release on Monday. Hence, the key focus will be on a scheduled speech by the Fed Chair Jerome Powell. Apart from this, the broader market risk sentiment will play a key role in influencing the USD/JPY pair and produce some meaningful trading opportunities.
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
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.