• USD/JPY struggled to gain any meaningful traction and remained confined in a range on Tuesday.
  • Hawkish Fed expectations continued acting as a tailwind for the USD and extended some support.
  • COVID-19 jitters underpinned the safe-haven JPY and capped gains amid declining US bond yields.

The USD/JPY pair oscillated in a narrow trading band through the Asian session and was last seen hovering in the neutral territory, just above mid-113.00s.

A combination of diverging forces failed to assist the USD/JPY pair to capitalize on the previous day's modest gains and led to a subdued/range-bound price move on Tuesday. The US dollar stood tall near a one-week high and remained well supported by the prospects for an early policy tightening by the Fed. That said, a generally softer risk tone underpinned the safe-haven Japanese yen and kept a lid on any further gains for the major.

The US CPI report for November released on Friday reaffirmed market expectations that the Fed would adopt a more aggressive policy response to contain stubbornly high inflation. In fact, the money markets indicate the possibility of liftoff by June 2022 and another hike as early as November. This, in turn, was seen as a key factor that continued acting as a tailwind for the greenback and extended some support to the USD/JPY pair.

Apart from this, renewed concerns about the economic risks emerging from the spread of the Omicron variant of the coronavirus tempered investors' appetite for riskier assets. This was evident from the prevalent cautious mood around the equity markets, which drove some haven flows towards the JPY. The flight to safety was evident from a further decline in the US Treasury bond yields, which further capped the upside for the USD/JPY pair.

Moving ahead, market participants now look forward to the release of the US Producer Price Index (PPI) later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to the USD/JPY pair. Traders will further take cues from the broader market risk sentiment.

The key focus, however, will remain on the outcome of a two-day FOMC monetary policy meeting. The US central bank is scheduled to announce its decision on Wednesday, which will play a key role in driving the USD demand in the near term. Apart from this, developments surrounding the coronavirus saga would determine the next leg of a directional move for the USD/JPY pair.

Technical levels to watch

USD/JPY

Overview
Today last price 113.58
Today Daily Change -0.02
Today Daily Change % -0.02
Today daily open 113.6
 
Trends
Daily SMA20 113.88
Daily SMA50 113.67
Daily SMA100 111.84
Daily SMA200 110.7
 
Levels
Previous Daily High 113.72
Previous Daily Low 113.28
Previous Weekly High 113.95
Previous Weekly Low 112.74
Previous Monthly High 115.52
Previous Monthly Low 112.53
Daily Fibonacci 38.2% 113.55
Daily Fibonacci 61.8% 113.45
Daily Pivot Point S1 113.34
Daily Pivot Point S2 113.08
Daily Pivot Point S3 112.89
Daily Pivot Point R1 113.79
Daily Pivot Point R2 113.98
Daily Pivot Point R3 114.24

 

 

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

AUD/USD bulls seek a break of 0.6925 for 0.6950 target area

AUD/USD bulls seek a break of 0.6925 for 0.6950 target area

AUD/USD is consolidated at the start of the Asian day following some back and forth at the start of the week. The Aussie is trading at 0.6922 and will be dependent on the trajectory of the greenback in the absence of domestic data this week other than Retail Sales tomorrow. 

AUD/USD News

EUR/USD retreats from fortnight high near 1.0600 on recession/inflation fears

EUR/USD retreats from fortnight high near 1.0600 on recession/inflation fears

EUR/USD holds onto the pullback from a two-week high as bulls get rejections from short-term key resistances, as well as risk-off mood, during Tuesday’s Asian session. The major currency pair remains pressured around 1.0585.

EUR/USD News

Gold sees downside below $1,820, focus shifts to Fed Powell

Gold sees downside below $1,820, focus shifts to Fed Powell

Gold price displayed a failed attempt to sustain above the critical resistance of $1,840.00 on Monday. The precious metal has turned sideways after a sheer downside move and is expected to extend its losses after violating the crucial support of $1,820.85.

Gold News

Terra’s LUNA price finally shows the buy signal you’ve been waiting for

Terra’s LUNA price finally shows the buy signal you’ve been waiting for

Terra’s LUNA price shows optimism to start the final week of June. The potential for a new bull run is beginning to materialize. LUNA price sees an uptick in social media commentary.
 

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!

BECOME PREMIUM

Forex MAJORS

Cryptocurrencies

Signatures