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. 

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

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD tumbles to five-week low on rising US yields, energy crisis

EUR/USD has tumbled below 1.17, hitting the lowest since August 20 as Europe struggles with soaring gas prices and China suffers power cuts. Fed Chair Powell is set to testify and comment about the bank's recent taper signal. 


GBP/USD drops towards 1.3650 amid firmer dollar, energy crisis

GBP/USD is dropping towards 1.3650, undermined by the US dollar's strength and the UK's fuel problem. The British army is on standby to mitigate fuel shortages. The pound ignores the hawkish comments from BOE Governor Bailey. 


XAU/USD drops to $1,735 area amid surging US bond yields

Gold witnessed fresh selling during the early European session and dropped to the $1,735 area or the lowest level since August 11 in the last hour.

Gold News

Crypto markets prepare for a bullish October

Bitcoin price shows signs of bullish breakout as it traverses a falling wedge. Ethereum price also displays an optimistic outlook as it forms a descending parallel channel.

Read more

Conference Board Consumer Confidence Preview: Unhappy but still spending

The collapse of consumer optimism in August has not exacted the expected toll from American spending, the most important factor in sustaining the US  economic recovery. August’s confidence reading at 113.8 was the lowest since February.

Read more