USD/JPY stays directionless around 108.50 despite sour market mood
- Major European equity indexes suffer heavy losses on Tuesday.
- 10-year US Treasury bond yield erases more than 1%.
- US Dollar Index stays in red despite upbeat business sentiment data.
The USD/JPY pair is having a difficult time making a decisive move in either direction on Tuesday and continues to fluctuate in a tight range near the 108.50 handle.
Although the ZEW data revealed that the Economic Sentiment rose sharply both in Germany and the eurozone in December, major European equity indexes are registering heavy losses. Germany's DAX 30 was last down 1.6% on the day while the Eurostoxx 50 and the UK's FTSE 100 were erasing 1.2% and 1.1%, respectively.
Additionally, the 10-year US Treasury bond yield, which erased nearly 1% on Monday, was last down 1.05% on the day to confirm the dismal market mood. Nevertheless, the JPY seems to be struggling to find demand as a safe-haven as investors refrain from making large bets ahead of Wednesday's FOMC announcements and the looming US tariff hike on Chinese imports on December 15th.
USD continues to erase Friday's gains
On the other hand, the only data from the US showed that the business sentiment improved at a more robust pace than expected in November with the NFIB Business Optimism rising to 104.7 from 102.4 to beat analysts' estimate of 102.8. Despite the upbeat data, the US Dollar Index is posting modest losses near the 97.50 mark to allow the pair to remain neutral.
Later in the session, Capacity Utilization and Labor Costs data from the US will be released but the pair is unlikely to make a strong enough move to break out of its range.
Previewing the FOMC meeting, “The meeting won’t be without interest as they will release the latest Summary of Economic Projections, with market participants focusing on the dot plot as usual for clues as to whether member’s rate biases are changing," said Deutsche Bank analysts. "Friday’s payrolls number (more below) will likely give them some confidence in the outlook.”
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
