• USD/JPY edged lower on the first day of the week amid broad-based USD weakness.
  • The risk-on impulse undermined the safe-haven JPY and helped limit further losses.
  • The Fed-BoJ policy divergence also held back traders from placing fresh bearish bets.

The USD/JPY pair witnessed some selling on the first day of a new week, though managed to find some support ahead of the monthly low, around the 127.00 mark touched last Thursday. The pair remained on the defensive through the mid-European session and was last seen trading just a few pips above mid-127.00s.

The US dollar added to last week's heavy losses and dropped to its lowest level since April 26 amid a strong pickup in demand for the shared currency. Moreover, a 50 bps Fed rate hike move over the next two policy meetings is fully priced in the markets. The combination of factors dragged the USD Index to its lowest level since April 26, which, in turn, exerted some downward pressure on the USD/JPY pair. That said, a combination of factors acted as a headwind for the Japanese yen and helped limit any deeper losses, at least for the time being.

Investors turned optimistic amid hopes that loosening COVID-19 lockdowns in China would boost the global economy. This was evident from a generally positive tone around the equity markets, which tends to undermine the safe-haven Japanese yen. The risk-on flow was reinforced by a goodish pickup in the US Treasury bond yields. This, along with a big divergence in the monetary policy stance adopted by the Bank of Japan and the Fed, acted as a tailwind for spot prices. This, in turn, warrants caution before placing fresh bearish bets around the USD/JPY pair.

It is worth recalling that the BoJ has vowed to keep its existing ultra-loose policy settings and promised to conduct unlimited bond purchase operations to defend its near-zero target for 10-year yields. In contrast, the US central bank is anticipated to take more drastic action to bring inflation under control. Hence, the focus will remain on the minutes of the latest FOMC monetary policy meeting, due for release on Wednesday. This, along with key US macro data scheduled during the latter part of the week, would provide a fresh directional impetus to the USD/JPY pair.

In the meantime, the USD price dynamics might continue to play a key role in influencing spot prices amid absent relevant market moving economic releases from the US. Traders might further take cues from the broader market risk sentiment and the US bond yields to grab short-term opportunities around the USD/JPY pair.

Technical levels to watch


Today last price 127.61
Today Daily Change -0.29
Today Daily Change % -0.23
Today daily open 127.9
Daily SMA20 129.27
Daily SMA50 125.69
Daily SMA100 120.42
Daily SMA200 116.44
Previous Daily High 128.3
Previous Daily Low 127.53
Previous Weekly High 129.78
Previous Weekly Low 127.02
Previous Monthly High 131.26
Previous Monthly Low 121.67
Daily Fibonacci 38.2% 128
Daily Fibonacci 61.8% 127.82
Daily Pivot Point S1 127.52
Daily Pivot Point S2 127.14
Daily Pivot Point S3 126.75
Daily Pivot Point R1 128.29
Daily Pivot Point R2 128.68
Daily Pivot Point R3 129.06



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

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD has lost its bullish momentum after having climbed above 1.0570 with the initial reaction to the US data in the American session and retreated toward the mid-1.0500s. On a weekly basis, the pair remains on track to close in positive territory. 


GBP/USD struggles to hold above 1.2300

GBP/USD struggles to hold above 1.2300

GBP/USD has edged lower following a jump above 1.2300 in the early American session on Friday. The market mood remains upbeat ahead of the weekend with Wall Street's main indexes posting strong daily gains on upbeat US data. 


Gold stays below $1,830 as US yields edge higher

Gold stays below $1,830 as US yields edge higher

Gold continues to fluctuate below $1,830 on Friday and looks to close the second straight week in negative territory. Fueled by the risk-positive market environment, the benchmark 10-year US Treasury bond yield is up more than 1% on the day, limiting XAU/USD's upside.

Gold News

Why Cardano could surprise over the weekend

Why Cardano could surprise over the weekend

ADA  set to close out the week with a gain on the workday trading week and over the weekend? Central banks signaled that the rate hike cycle is ending, meaning less stress and tight conditions for trading, opening up room for some upside potential with Cardano set to pop above $0.55 and test a significant cap.

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!