- 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
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.
Recommended content
Editors’ Picks
AUD/USD: Further weakness remains in the pipeline
AUD/USD resumed its decline and slipped back to the 0.6360-0.6350 band, or monthly troughs, on the back of the strong resumption of the bid bias around the Greenback, which was reignited following the US-China trade talks over the weekend.
USD/JPY surges as risk-on sentiment weighs on safe-haven Yen
USD/JPY is trading near 148.00 as risk-on sentiment dominates global markets following a significant breakthrough in US-China trade relations. This temporary de-escalation has sparked a rally in risky assets, weighing on traditional safe-haven currencies like the Japanese Yen.
Gold: Gains appear limited near $3,250
Gold began the week under pressure, retreating toward the $3,200 mark per troy ounce, where some support appeared to materialise. The decline followed a broader improvement in risk sentiment after encouraging developments emerged from US-China trade talks over the weekend.
SEC Chair Paul Atkins reaffirms crypto as top priority under his administration
The Securities & Exchange Commission Chair Paul Atkins spoke at the Crypto Task Force roundtable on Monday, revealing his administration's agenda to treat crypto regulations as a top priority, with a focus on token issuance, custody and trading.
Memecoins on the move: WIF, BOME, and FLOKI post double-digit gains as US-China agree on tariff reduction
Dogwifhat, Book of Meme, and FLOKI extend their double-digit rallies on Monday, adding to last week’s surge. The rally is driven by growing risk-on sentiment in crypto markets after the US and China agreed to major tariff reductions.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.