USD/JPY sees two-way business in early Asia as gold nears record high
- USD/JPY is sidelined at press time with upside capped at 106.00.
- Gold's relentless rally keeps the greenback under pressure.
- BOJ expects Japan's economy to improve in the second half of this year.
USD/JPY is lacking a clear directional bias during Monday's Asian trading hour with investors focused on the gold market, where prices are now trading with a striking distance from testing record highs reached in September 2011.
At press time, the pair is sidelined near 106.00, having hit a high and low of 106.10 and 105.87 early today.
The Bank of Japan July meeting summary released about 30 minutes ago said Japan's economy may improve in the latter half of this year but warned out the second-round effect of the coronavirus pandemic on inflation expectations and companies' price-setting behavior.
The yen failed to draw bids on BOJ's optimistic comments on the economy and weakened, allowing USD/JPY to bounce from 105.87 to 106.00, possibly tracking the uptick in the US stock futures. As of writing, the futures on the S&P 500 are reporting a 0.24% gain.
So far, however, the upside has been capped near 106.10. The sentiment around the dollar remains weak, courtesy of the relentless rally in gold. The yellow metal is currently trading at $1,918 - just $3 short of setting a new record high above $1,920 (September 2011 high). The metal rallied by 5% last week.
Looking forward, however, the pair may rise well above 106.10 if the US stock futures extend early gains and succeed in restoring the risk sentiment in the global equity markets. Stocks came under pressure last week due to an unprecedented escalation of tensions between the US and China and a growing number of virus cases in the US.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
