The greenback has started the week on the back footing, now dragging USD/JPY to the 110.80 area.
USD/JPY eyes on Fedspeak
After climbing to fresh 6-month highs near 111.20 during overnight trade, the pair’s upside lost some vigour and has sparked a correction to the mid-110.00s, albeit finding some buying interest in that region afterwards.
The upward momentum in USD remains propped up by expectations of further monetary tightening by the Federal Reserve, with the probability of a rate hike in December above 95% in view of CME Group’s FedWatch tool.
Adding to the dollar’s bullish outlook, the prospects of a looser fiscal policy by the Trump’s administration could prompt the Fed to accelerate the pace of its hikes amidst expectations of higher inflation.
In the meantime, the yield spread differential between US Treasuries and JGBs stays supportive of the buck, especially after the BoJ introduced its ‘yield control’ back in September.
Reflecting the recent downside bias in JPY, net longs have retreated to the lowest level since late May while Open Interest have climbed to the highest level since mid-June during the week ended on November 15 and as seen in the latest CFTC report.
USD/JPY levels to consider
As of writing the pair is losing 0.07% at 110.82 and a break below 110.55 (low Nov.21) would aim for 107.74 (low Nov.15) and then 106.31 (200-day sma). On the other hand, the next resistance is located at 111.19 (high Nov.21) ahead of 111.45 (high May 30) and finally 111.92 (high Apr.25).
To learn more about this topic, check our video analysis:
usd jpy from Tip TV Productions on Vimeo.
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 trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800, as traders lack directional impetus amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.