- A downbeat market sentiment favors the safe-haven status of the Japanese yen vs. the greenback, US T-bond yields fall.
- JP Morgan closes its long positions in the Russian rouble as tensions in Eastern Europe arise.
- USD/JPY Technical Outlook: Points upward, but a break under 113.50 could send the pair tumbling to 112.53.
After testing the YTD lows reached on January 14 around 113.48, the USD/JPY edges up, some 0.09%. At the time of writing, the USD/JPY is trading at 113.75 during the New York session.
Market sentiment downbeat amid increasing tensions in Eastern Europe and the Fed monetary policy meeting
The risk-off market mood spurred by increasing tensions in Eastern Europe and the two-day Federal Reserve monetary policy meeting keeps investors unease on mounting expectations that the US central bank would be aggressive tightening its policy conditions amid rising inflation, which reached 7% on December’s report.
According to Reuters, JP Morgan closed all its remaining long positions in the Russian rouble on Monday, “warning the military build-up near Ukraine meant geopolitical uncertainty was now prohibitively high.” That alongside the US 10-year Treasury yield moving lower, from around 1.80% in the last week, at press time plunges almost six basis points, from 1.772% to 1.719%, weighs on the USD/JPY, which has a positive correlation with US T-bond yields.
In the meantime, the US Dollar Index, a gauge of the greenback against six peers, is at 96.00, reached at 14:22 GMT.
The economic docket witnessed a release of Markit PMI’s across the globe. In Japan, the Manufacturing PMI rose to 54.6, but the Services component plummeted to 46.6 from 52.1 in December. As a result, the composite PMI is down to 48.8, the first time below 50 since the September reading. Meanwhile, the Markit PMI for the US will be unveiled at 14:45 GMT in the US. December’s reading portrayed the Manufacturing PMI at 57.7, the Services PMI at 57.6, and the Composite stayed at 57.0.
USD/JPY Price Forecast: Technical outlook
The USD/JPY daily chart witnessed a second touch at the YTD lows around 113.48, near the 78.6% Fibonacci retracement, drawn from November 2021 cycle lows at 112.53 up to January 4 pivot high at 116.34. That alongside the 100-day moving average (DMA) around 113.28 should cape any downward moves in the pair, which in the case of being broken, would expose November 30, 2021, daily low at 112.53.
The USD/JPY first resistance level would be 114.00. A breach of the latter would expose the 50-DMA at 114.32, followed by the January 18 daily high at 115.08.
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
USD/JPY holds above 155.50 ahead of BoJ policy announcement
USD/JPY is trading tightly above 155.50, off multi-year highs ahead of the BoJ policy announcement. The Yen draws support from higher Japanese bond yields even as the Tokyo CPI inflation cooled more than expected.
AUD/USD extends gains toward 0.6550 after Australian PPI data
AUD/USD is extending gains toward 0.6550 in Asian trading on Friday. The pair capitalizes on an annual increase in Australian PPI data. Meanwhile, a softer US Dollar and improving market mood also underpin the Aussie ahead of the US PCE inflation data.
Gold price keeps its range around $2,330, awaits US PCE data
Gold price is consolidating Thursday's rebound early Friday. Gold price jumped after US GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the Fed could lower borrowing costs. Focus shifts to US PCE inflation on Friday.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.