USD/JPY slides back closer to monthly low amid the emergence of fresh USD selling

USD/JPY faces rejection near the 150.00 mark and turns lower for the third straight day.
Dovish Fed expectations continue to weigh on the USD and act as a headwind for the pair.
A positive risk tone could undermine the safe-haven JPY and help limit any further losses.

Haresh Menghani FXStreet

The USD/JPY pair meets with a fresh supply following an Asian session uptick to the 150.00 psychological mark and drifts into negative territory for the third successive day on Monday. Spot prices currently trade around the mid-149.00s and remain well within the striking distance of the monthly low retested on Friday.

The US Dollar (USD) languishes near its lowest level since September 1 amid dovish Federal Reserve (Fed) expectations, which, in turn, is seen as a key factor acting as a headwind for the USD/JPY pair. Investors now seem convinced that the US central bank is done raising interest rates and the bets were reaffirmed by last week's data, which indicated that consumer inflation was cooling faster than anticipated. Moreover, the markets are now pricing in nearly 100 bps of Fed rate cuts by December 2024 which led to the recent sharp decline in the US Treasury bond yields.

In fact, the yield on the benchmark 10-year US government bond fell to a two-month low of 4.379% on Friday, which is holding back the USD bulls from placing aggressive bets and capping the upside for the USD/JPY pair. The Japanese Yen (JPY), on the other hand, gets a minor lift in reaction to the upbeat comments by Japan's Finance Minister Sunichi Suzuki, saying that now is a once-in-a-lifetime chance to beat deflation and that bright signs emerging in Japan's economy. This further contributes to the pair's intraday pullback of around 60 pips from the daily peak.

That said, a generally positive tone around the Asian equity markets could undermine the safe-haven JPY and lend some support to the USD/JPY pair. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for spot prices is to the downside. Hence, any attempted recovery move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly in the absence of any relevant market-moving economic releases, either from Japan or the US on Monday.

Technical levels to watch

USD/JPY

Overview
Today last price	149.45
Today Daily Change	-0.24
Today Daily Change %	-0.16
Today daily open	149.69

Trends
Daily SMA20	150.48
Daily SMA50	149.45
Daily SMA100	146.5
Daily SMA200	141.39

Levels
Previous Daily High	150.78
Previous Daily Low	149.2
Previous Weekly High	151.91
Previous Weekly Low	149.2
Previous Monthly High	151.72
Previous Monthly Low	147.32
Daily Fibonacci 38.2%	149.8
Daily Fibonacci 61.8%	150.17
Daily Pivot Point S1	149
Daily Pivot Point S2	148.31
Daily Pivot Point S3	147.42
Daily Pivot Point R1	150.58
Daily Pivot Point R2	151.47
Daily Pivot Point R3	152.16

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.