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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.

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 price149.45
Today Daily Change-0.24
Today Daily Change %-0.16
Today daily open149.69
 
Trends
Daily SMA20150.48
Daily SMA50149.45
Daily SMA100146.5
Daily SMA200141.39
 
Levels
Previous Daily High150.78
Previous Daily Low149.2
Previous Weekly High151.91
Previous Weekly Low149.2
Previous Monthly High151.72
Previous Monthly Low147.32
Daily Fibonacci 38.2%149.8
Daily Fibonacci 61.8%150.17
Daily Pivot Point S1149
Daily Pivot Point S2148.31
Daily Pivot Point S3147.42
Daily Pivot Point R1150.58
Daily Pivot Point R2151.47
Daily Pivot Point R3152.16

Author

Haresh Menghani

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

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