• USD/JPY attracts some dip-buying on Thursday and turns positive for the third straight day.
  • The Fed-BoJ policy divergence continues to weigh on the JPY and offers support to the pair.
  • Sliding US bond yields keep the USD bulls on the defensive and might cap any further gains.

The USD/JPY pair reverses an intraday dip to the 133.40 area and turns positive for the third straight day on Thursday. Spot prices climb back above the 134.00 mark during the early European session, with bulls now eyeing a move towards the weekly high touched the previous day.

A big divergence in the monetary policy stance adopted by the Federal Reserve and the Bank of Japan continues to weigh on the Japanese yen, which, in turn, acts as a tailwind for the USD/JPY pair. It is worth recalling that several Fed officials hinted this week that more interest rates are coming in the near term. In contrast, the BoJ has repeatedly called to stick to its ultra-easy policy settings and its commitment to keep the 10-year Japanese government bond yield around 0%.

The USD/JPY pair uptick, however, seems limited amid the ongoing decline in the US Treasury bond yields, which keeps the US dollar bulls on the defensive. Apart from this, the cautious mood around the equity markets could lend some support to the safe-haven JPY and further contribute to capping any meaningful upside for the USD/JPY pair, at least for the time being. This makes it prudent to wait for strong follow-through buying before positioning for any further appreciating move.

Thursday's key focus would remain on the Bank of England monetary policy decision, which could infuse some volatility in the markets and provide some impetus to the USD/JPY pair. Traders will further take cues from the release of the usual Weekly Initial Jobless Claims data from the US, due later during the early North American session. This, along with the US bond yields and Fedspeak, might influence the USD price dynamics and allow traders to grab short-term opportunities.

Technical levels to watch

USD/JPY

Overview
Today last price 134.19
Today Daily Change 0.34
Today Daily Change % 0.25
Today daily open 133.85
 
Trends
Daily SMA20 136.27
Daily SMA50 134.6
Daily SMA100 130.41
Daily SMA200 122.55
 
Levels
Previous Daily High 134.55
Previous Daily Low 132.29
Previous Weekly High 137.46
Previous Weekly Low 132.5
Previous Monthly High 139.39
Previous Monthly Low 132.5
Daily Fibonacci 38.2% 133.69
Daily Fibonacci 61.8% 133.15
Daily Pivot Point S1 132.58
Daily Pivot Point S2 131.3
Daily Pivot Point S3 130.32
Daily Pivot Point R1 134.84
Daily Pivot Point R2 135.82
Daily Pivot Point R3 137.1

 

 

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