• USD/JPY feels the pull of gravity as Fed vows to keep policy easy to support the economy.
  • Powell's comments reinforce expectations for yield curve controls. 
  • The dollar may find bids if stocks turn risk-averse. 

USD/JPY is reporting losses for the fourth straight day amid weak tone in the US stock index futures and broad-based losses in the US dollar. 

The pair is currently trading near 106.95, representing a 0.15% decline on the day, having put in a low of 106.89 a few minutes before press time. That was the lowest level since May 15. 

The 0.40% decline in the futures tied to the S&P 500 is clearly not helping the US dollar, which is slightly confounding, given markets have been treating the greenback as a haven currency since the beginning of the coronavirus outbreak. 

The greenback is feeling the pull of gravity, possibly due to dovish comments by the US Federal Reserve President Jerome Powell. 

The Fed chief said on Wednesday that policymakers had a full discussion about employing yield curve controls. His comments reinforced expectations that the Fed is planning to implement yield curve controls in the near future. In addition, the Fed presented a dour economic outlook, pouring cold water over the optimism generated by last Friday's stellar Nonfarm Payrolls. 

Looking forward, the dovish Fed and the rally in EUR/USD may keep the dollar on the defensive against majors. EUR/USD jumped to a three-month high of 1.1422 on Wednesday and remains bid near 1.14 at press time. 

However, if the risk aversion worsens, investors could seek safety in the US dollar, stalling the decline in the USD/JPY pair. 

Technical levels

    1. R3 108.55
    2. R2 108.21
    3. R1 107.67
  1. PP 107.33
    1. S1 106.78
    2. S2 106.44
    3. S3 105.9

 

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.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD stays below 1.0900 after US data

EUR/USD stays below 1.0900 after US data

EUR/USD continues to trade in a relatively tight range below 1.0900 on Friday. The data from the US showed that the annual PCE inflation declined to 5% in December from 5.5% in November but failed to trigger a significant reaction. Investors await US Pending Home Sales data.

EUR/USD News

GBP/USD trades on the back foot below 1.2400

GBP/USD trades on the back foot below 1.2400

GBP/USD is having a difficult time gathering recovery momentum and trading in negative territory below 1.2400 on Friday. Although the data from the US showed that PCE inflation continued to soften in December, the US Dollar's losses remain limited.

GBP/USD News

Gold clings to small daily gains above $1,930

Gold clings to small daily gains above $1,930

Gold price has managed to stage a rebound and climbed above $1,930 after having declined toward $1,920 earlier in the day. The benchmark 10-year US Treasury bond yield retreated modestly from daily highs after the latest US data, helping XAU/USD edge higher.

Gold News

Is the dramatic rise in whale activity in AAVE, MATIC and DYDX a sell signal?

Is the dramatic rise in whale activity in AAVE, MATIC and DYDX a sell signal?

AAVE, MATIC and DYDX price rallied alongside large market capitalization cryptocurrencies Bitcoin and Ethereum in January. Experts at the crypto intelligence tracker Santiment believe the recent spike in activity by whales on these networks needs to be watched closely.

Read more

Breaking: US annual Core PCE inflation declines to 4.4% in December as expected

Breaking: US annual Core PCE inflation declines to 4.4% in December as expected

Inflation in the US, as measured by the Personal Consumption Expenditures (PCE) Price Index, declined to 5% on a yearly basis in December from 5.5% in November, the US Bureau of Economic Analysis reported on Friday.

Read more

Forex MAJORS

Cryptocurrencies

Signatures