- USD/JPY kicks off the new week on a positive note and draws support from a modest USD strength.
- Bets for July Fed rate hike remain supportive of elevated US bond yields and lend support to the buck.
- Japan intervention fears to cap any meaningful gains for the pair ahead of the US CPI on Wednesday.
The USD/JPY pair attracts some buyers near the 142.00 round figure during the Asian session on Monday and recovers a part of Friday's heavy losses to its over a one-week low. Spot prices currently trade just below the 142.50 area, up nearly 0.30% for the day.
The US Dollar (USD) kicks off the new week on a positive note and for now, seems to have snapped a two-day losing streak to its lowest level since June 2022 touched on Friday, which, in turn, is seen lending some support to the USD/JPY pair. Firming expectations that the Federal Reserve (Fed) will hike interest rates by 25 bps later this month remains supportive of elevated US Treasury bond yields and acts as a tailwind for the USD. That said, reduced bets for any further lift-off after the one expected in July might hold back traders from placing aggressive bets around the USD.
The US NFP report released on Friday showed that the economy added the fewest jobs in 2-1/2 years in June and suggested that labor market conditions were finally easing. This, along with signs that the inflation is gradually slowing, fueled speculations that the Fed will eventually soften its hawkish stance, sooner rather than latter. Apart from this, speculations that Japan might intervene in currency markets to prop up the Japanese Yen might further contribute to capping the upside for the USD/JPY pair and warrant caution before positioning for any further appreciating move.
Moreover, tradres might also prefer to move to the sidelines ahead of this week's release of the latest US consumer inflation figures, due on Wednesday, which is expected to show that the headline CPI is expected to decelerate further in June. Any positive surprise, however, might prompt aggressive short-covering around the USD and suggest that the USD/JPY pair's recent corrective decline from the YTD top has run its course. Heading into the key data risk, the fundamental backdrop makes it prudent to wait for some follow-through buying before placing fresh bullish bets.
Technical levels to watch
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 climbs to daily highs near 1.0770 on Dollar selling
EUR/USD manages to regain extra upside traction on the back of the renewed sell-off in the Greenback, reaching fresh daily highs in the 1.0770 region, or. two-day peaks.
GBP/USD hovers around 1.2500 post-BoE
GBP/USD alternates gains with losses around the 1.2500 neighbourhood amidst extra weakness in the Dollar, while market participants continue to digest the BoE event.
Gold poised to resume its advance
XAU/USD now gathers fresh steam and advances to the highest level in many sessions north of the $2,330 mark per troy ounce on the back of further selling pressure hurting the Greenback as well as mixed US yields.
Solana meme coins TREMP, BODEN rise after Donald Trump’s pro-crypto stance
Solana-based meme coins TREMP and BODEN post nearly 125% and 7% gains on Thursday. Former US President Donald Trump says his campaign will likely accept crypto donations.
Bank of England inches one step closer to a summer rate cut
The Bank of England is undoubtedly turning more optimistic, but it’s keeping its options open amid some uncertainty surrounding the near-term inflation numbers. We still narrowly expect the first rate cut in August.