- USD/JPY dropped to two-week lows amid the emergence of some fresh USD selling.
- Fading safe-haven demand undermined the JPY and helped limit deeper losses.
- A sustained break below the 105.00 mark will pave the way for additional weakness.
The USD selling bias picked up pace during the early North American session and pushed the USD/JPY pair to near two-week lows, around the 105.15 region in the last hour.
The US dollar remained depressed on the back of fading hopes over additional US fiscal stimulus measures and the political uncertainty ahead of the upcoming US presidential election on November 3. Adding to this, a weaker tone surrounding the US Treasury bond yields further undermined the greenback and exerted some additional downward pressure on the USD/JPY pair.
However, a positive opening in the US equity markets dented demand for traditional safe-haven assets, including the Japanese yen. The upbeat market mood, in turn, was seen as the only factor that helped limit deeper losses for the USD/JPY pair, at least for the time being. This makes it prudent to wait for some follow-through selling before placing any aggressive bearish bets.
On the economic data front, the Producer Price Index (PPI) in the US ticked higher to 0.4% MoM in September from 0.3% recorded in the previous month. On a yearly basis, the PPI rose to 0.4% from -0.2% and came in higher than the market expectation of 0.2%. The data, however, did little to impress bullish traders or provide any meaningful impetus to the USD/JPY pair.
Meanwhile, Richmond Federal Reserve President Thomas Barkin reiterated that the US central bank will aim to keep rates low until they see moderate overshoots of inflation. Separately, Federal Reserve's Vice Chairman Richard Clarida said that the Fed is committed to using its full range of tools to support the economic recovery and that it would perhaps take another year before the US GDP reaches the pre-pandemic peak.
It will now be interesting to see if the USD/JPY pair is able to find any support at lower levels or breakt hrough the key 105.00 psychological mark. Some follow-through weakness below monthly swing lows, around the 104.94 level will be seen as a fresh trigger for bearish traders and pave the way for a slide back towards challenging the 104.00 mark.
Technical levels to watch
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 stays below 1.0700 after US data
EUR/USD stays in a consolidation phase below 1.0700 in the early American session on Wednesday. The data from the US showed a strong increase in Durable Goods Orders, supporting the USD and making it difficult for the pair to gain traction.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold trades on the back foot, manages to hold above $2,300
Gold struggles to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to reverse its direction.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.