- USD/JPY edged higher for the second successive day, though lacked any follow-through.
- The risk-on mood undermined the safe-haven JPY and remained supportive of the move.
- Retreating US bond yields weighed on the USD and kept a lid on any meaningful gains.
The USD/JPY pair maintained its bid tone heading into the North American session, albeit struggled to find acceptance or build on the momentum beyond the 114.00 mark.
The pair built on the overnight rebound from the 113.40 area, marking ascending trend-line support extending from September swing lows, and gained some follow-through traction on Tuesday. This marked the second successive day of a positive move and was sponsored by the prevalent risk-on mood, which tends to undermine the safe-haven Japanese yen.
The uptick, however, lacked bullish conviction amid the emergence of fresh selling around the US dollar, weighed down by an extension of the recent decline in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond has now dropped closer to the 1.60% threshold, though hawkish Fed expectations should act as a tailwind.
The Fed chair Jerome Powell reaffirmed on Friday that the US central bank remains on track to begin tapering its bond purchases by the end of this year. The markets have also been pricing in the possibility of a potential interest rate hike in 2022 amid worries that the recent widespread rally in commodity prices will stoke inflation.
The fundamental backdrop seems tilted in favour of bullish trades and supports prospects for additional gains. That said, investors are likely to refrain from placing aggressive bets ahead of Thursday's Bank of Japan policy meeting and the Advance US Q3 GDP report. This, in turn, warrants some caution for aggressive bullish traders.
Market participants now look forward to the US economic docket, featuring the releases of the Conference Board’s Confidence Index, Richmond Manufacturing Index and New Home Sales. This, along with the US bond yields and the broader market risk sentiment, should assist traders to grab some short-term opportunities around the USD/JPY pair.
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
USD/JPY holds near 155.50 after Tokyo CPI inflation eases more than expected
USD/JPY is trading tightly just below the 156.00 handle, hugging multi-year highs as the Yen continues to deflate. The pair is trading into 30-plus year highs, and bullish momentum is targeting all-time record bids beyond 160.00, a price level the pair hasn’t reached since 1990.
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Ethereum could remain inside key range as Consensys sues SEC over ETH security status
Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the US SEC and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.