USD/JPY dips to one-month low even as S&P 500 futures decline

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.

Omkar Godbole FXStreet Contributor

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
PP 107.33
1. S1 106.78
2. S2 106.44
3. S3 105.9

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD flirts with tops near 1.3470

GBP/USD manages to regain composure and challenge the area of daily highs around 1.3470 on Friday. Cable picks up pace despite marginal gains in the Greenback in a context of swelling geopolitical tensions and rising global oil prices.

EUR/USD gains traction above 1.1500 constrained below 100-day SMA

The EUR/USD pair trades in positive territory near 1.1535 during the early European trading hours, bolstered by improved risk sentiment. The Euro edges higher against the US Dollar after reports that US President Donald Trump had called off an attack on Iran and talks between the two sides would happen on Monday. Traders will closely monitor the developments surrounding US-Iran negotiations.

Gold's struggle with 21-day SMA extends ahead of US-Iran talks

Gold keeps its range around $4,050 early Monday, consolidating the previous decline. The US Dollar holds losses, fuelled by the USD/JPY slump and Mideast diplomacy hopes. Gold awaits a clear directional breakthrough, but sellers likely have the upper hand on the 1D chart.

Week ahead: US payrolls report and AI earnings to keep investors on edge

After the Fed decision, NFP report awaited for more rate hike clues. Employment also on the agenda in Canada and New Zealand. Chinese trade and Japanese wage data to be watched too. But Iran and AI headlines to remain in driver’s seat for risk sentiment.

Solana risks a steeper decline below $70 despite steady ETF inflows

Solana (SOL) is trading in the red, losing bullish momentum and remaining capped below its 50-day Exponential Moving Average at $75.68. SOL-focused Exchange Traded Funds show resilience with a monthly inflow of $14.62 million in July, while the near-term retail support wanes with the funding rate turning negative.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.