•  Follow-through USD upsurge was seen supporting the early up-move.
   •  JPY further weighed down by BoJ’s weaker view on inflation/status quo.
   •  Profit-taking kicks in amid a modest revival in safe-haven demand.

The USD/JPY pair stalled its bullish momentum ahead of the 111.00 handle and has now retreated towards the lower end of its daily trading range. 

The pair initially built on overnight sharp rebound from sub-110.00 level and continued gaining traction on the last trading day of the week following a dovish BoJ assessment on inflation, signalling that policymakers are in no hurry to scale back the stimulus.

In its June monetary policy meeting, the Bank of Japan opted to leave the key interest rate steady at -0.1% and pledged the yield target for 10-year Japanese government bonds around 0%.

Adding to this, a follow-through greenback buying interest, with the key US Dollar Index hitting its best level since July 2017, remained supportive of the ongoing bullish momentum to over three-week tops. 

Against the backdrop of Wednesday's hawkish Fed rate hike, Thursday's dovish ECB statement and BoJ's weaker view on inflation outlook reinforced monetary policy divergence between the US and other major central banks and is turning out to be positive for the buck.

Meanwhile, escalating US-China trade tensions largely offset a positive opening across European bourses, and was seen lending some support to the Japanese Yen’s safe-haven appeal. Traders opted to take some profits off the table and seemed to be the only factors behind the pair’s retracement of around 40-pips from session high.

Today’s second-tier US economic data - Empire State Manufacturing Index, Industrial Production, Capacity Utilization and Prelim UoM Consumer Sentiment, is unlikely to prove to be a game-changer but will still be looked upon to grab some short-term trading opportunities. 

Technical outlook

Valeria Bednarik, FXStreet's own American Chief Analyst writes: “The USD/JPY pair 4 hours´ chart shows that it holds around its weekly highs, resulting in a limited upward momentum in technical indicators that anyway hold within bullish territory and with positive slopes. In the same chart, the pair is well above still directionless moving averages, also above the 61.8% retracement of its latest decline, and poised to extend its rally up to the 111.40 region on a break above 111.00. The downside is now being limited by a Fibonacci support at 110.15.”

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 loses recovery momentum after testing 1.0200

EUR/USD loses recovery momentum after testing 1.0200

EUR/USD has lost its momentum after having climbed toward 1.0200 during the European trading hours on Wednesday. As investors wait for the FOMC to release the minutes of its July meeting, the dollar consolidates its daily gains, allowing the pair to hold above 1.0150.


GBP/USD retreats to 1.2050 area ahead of FOMC Minutes

GBP/USD retreats to 1.2050 area ahead of FOMC Minutes

GBP/USD has reversed its direction after having recovered toward 1.2100 in the second half of the day on Wednesday and retreated toward 1.2050. The risk-averse market environment makes it difficult for the pair to gain traction as focus shifts to FOMC Minutes.


Gold bears pressuring a critical Fibonacci support

Gold bears pressuring a critical Fibonacci support

The dollar is the overall winner across the FX board today and ahead of the release of the FOMC Meeting Minutes, with gold trading near a fresh one-week low.  XAUUSD is pressuring the 38.2% retracement of its latest daily advance.

Gold News

Will the FOMC minutes make or break Bitcoin’s uptrend?

Will the FOMC minutes make or break Bitcoin’s uptrend?

Ahead of the FOMC minutes release Bitcoin withdrawal from exchanges continued. Proponents expect the market to react to signs Fed members will continue with more aggressive interest rate hikes, increasing the pressure on Bitcoin price. 

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!