- USD/JPY gained strong positive traction on Thursday and snapped four days of the losing streak.
- A goodish pickup in the USD demand turned out to be a key factor that pushed the pair higher.
- A softer risk tone could benefit the safe-haven JPY and cap gains ahead of the key central banks.
The USD/JPY pair built on its steady intraday ascent and climbed to a fresh daily high, around the 114.70 region during the first half of the European session.
Following an early dip to the 114.30 area, the USD/JPY pair attracted some buying on Thursday and snapped four successive days of the losing streak to a one-week low. The uptick was sponsored by a goodish pickup in demand for the US dollar, which, for now, seems to have stalled its recent sharp pullback from the 18-month peak touched last week.
Despite less hawkish comments by Fed officials, investors seem convinced that the US central bank will tighten its monetary policy at a faster pace than anticipated to contain stubbornly high inflation. Adding to this, an uptick in the US Treasury bond yields turned out to be a key factor that assisted the greenback to regain some positive traction.
The USD uptick could also be attributed to some repositioning trade ahead of the key central bank event risks – the Bank of England and the European Central Bank meetings on Thursday. That said, diminishing odds for a 50 bps Fed rate hike in March might hold back traders from placing aggressive bullish bets around the greenback.
Apart from this, a softer risk tone around the equity markets, the conflict between Russia and the West over Ukraine should lend some support to the safe-haven Japanese yen. This might further contribute to keeping a lid on any meaningful gains for the USD/JPY pair, warranting some caution before positioning for any further appreciating move.
Market participants now look forward to the US economic docket, highlighting the release of the ISM Services PMI. This, along with the US bond yields, might 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 to grab some short-term opportunities.
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: Is the US Dollar corrective decline over? Premium
The EUR/USD pair ended a three-week losing streak, recovering towards 1.0600 before finally finding sellers. The US Dollar (USD) gapped lower at the weekly opening after reaching fresh 2024 highs against its European rival, with EUR/USD bottoming at 1.0332 on November 22.
GBP/USD: Pound Sterling rebounds, not out of the woods yet Premium
The Pound Sterling (GBP) snapped a two-week downtrend and staged a comeback against the US Dollar (USD), driving the GBP/USD pair back to the 1.2700 threshold.
Gold: Easing geopolitical tensions trigger profit-taking Premium
Gold (XAU/USD) declined sharply on easing geopolitical concerns on Monday and spent the rest of the week trying to recover its losses. Employment-related macroeconomic data releases from the US could alter the expectations about the Federal Reserve’s policy decision in December and trigger the next big action in XAU/USD.
Bitcoin: A healthy correction
Bitcoin (BTC) experienced a 7% correction earlier in the week, dropping to $90,791 on Tuesday before recovering to $97,000 by Friday. On-chain data suggests a modest rebound in institutional demand, with holders buying the dip. A recent report indicates BTC remains undervalued, projecting a potential rally toward $146K.
US Dollar flat ahead of weekend full of uncertainties over France's budget
The US Dollar (USD) is recovering with the US trading session opening on Black Friday. The rally in the Euro which was weighing on the US Dollar and the US Dollar Index (DXY), is fading at the start of the US trading session.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.