- USD/JPY lost its traction after rising to multi-month highs.
- Falling US Treasury bond yields seem to be weighing on the pair.
- US Dollar Index clings to strong daily gains above 91.70.
Following Wednesday's upsurge, the USD/JPY extended its rally and reached its highest level since early April at 110.82. However, the pair reversed its direction in the second half of the day and was last seen losing 0.25% on a daily basis at 110.40.
Despite the unabated USD strength, a sharp decline witnessed in the US Treasury bond yields seems to be weighing on USD/JPY. At the moment, the benchmark 10-year US T-bond yield is down 2.3% on the day at 1.541%.
On Wednesday, the hawkish shift seen in the FOMC's Summary of Projections provided a boost to the greenback. With the number of policymakers expecting a lift-off in the fed funds rate from zero in 2023 rising to 13 from seven in March, the US Dollar Index (DXY) gained nearly 1% on a daily basis. At the moment, the DXY is up 0.42% on the day at 91.77.
Earlier in the day, the data published by the US Department of Labor revealed that the weekly Initial Jobless Claims rose to 412,000 from 375,000. Nevertheless, this data failed to trigger a meaningful market reaction.
Eyes on BoJ
On Friday, the Bank of Japan (BoJ) will announce its Interest Rate Decision and release the Monetary Policy Statement.
Previewing this event, "We still keep our view for the BoJ to do more and enhance its monetary policy easing further, most likely through re-accelerating its GB to Japanese corporates and SMEs," said Lee Sue Ann, Economist at UOB Group. "Market expectations are now tilted to the BoJ having reached the end of the line on normalization and will remain in a holding pattern on the policy until at least April 2023 when Governor Kuroda is scheduled to leave the BoJ."
Technical levels to watch for
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.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.