- USD/JPY witnessed fresh selling on Tuesday and dropped to a near three-week low.
- The risk-off mood benefitted the safe-haven JPY and exerted pressure on the major.
- Declining US bond yields weighed on the USD and contributed to the ongoing slide.
The USD/JPY pair dropped to a near three-week low heading into the European session, with bears still awaiting sustained weakness below the 113.00 round-figure mark.
The pair struggled to capitalize on its early positive move and once again met with fresh supply in the vicinity of the 114.00 mark. The global risk sentiment took a hit amid worries about the potential economic fallout from the spread of a new vaccine-resistant variant of the coronavirus – Omicron. This was evident from a fresh leg down in the equity markets, which boosted demand for the safe-haven Japanese yen and exerted downward pressure on the USD/JPY pair.
The already weaker sentiment deteriorated further after Moderna’s Chief Executive Stéphane Bancel predicted that existing vaccines will be much less effective at tackling Omicron than earlier strains of Covid-19. Bearish traders further took cues from the ongoing steep decline in the US Treasury bond yields, which weighed heavily on the US dollar. This was seen as another factor that contributed to the USD/JPY pair's slide to the lowest level since November 10.
In fact, the yield on the benchmark 10-year US government bond dropped back closer to the 1.45% threshold amid reduced bets for an early policy tightening by the Fed. Despite the negative factors, the USD/JPY pair, so far, has been showing some resilience below the 113.00 round figure. This warrants some caution for bearish traders and before positioning for an extension of last week's sharp pullback from a near five-year high, around mid-115.00s.
Market participants now look forward to the US economic docket, highlighting the release of the Conference Board's Consumer Confidence Index later during the early North American session. The key focus, however, will remain on Fed Chair Jerome Powell's testimony before the Senate Banking Committee. This will influence market expectations about the Fed's next policy move and produce some meaningful trading opportunities around the USD/JPY pair.
Technical levels to watch
|Today last price||113.2|
|Today Daily Change||-0.46|
|Today Daily Change %||-0.40|
|Today daily open||113.66|
|Previous Daily High||113.96|
|Previous Daily Low||112.99|
|Previous Weekly High||115.52|
|Previous Weekly Low||113.05|
|Previous Monthly High||114.7|
|Previous Monthly Low||110.82|
|Daily Fibonacci 38.2%||113.59|
|Daily Fibonacci 61.8%||113.36|
|Daily Pivot Point S1||113.11|
|Daily Pivot Point S2||112.57|
|Daily Pivot Point S3||112.15|
|Daily Pivot Point R1||114.08|
|Daily Pivot Point R2||114.5|
|Daily Pivot Point R3||115.04|
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.