USD/JPY stuck in tight range below 110 ahead of Fed speeches

US Dollar Index extends rally on Thursday.
European equity indexes suffer heavy losses.
Fed's Clarida and Dallas Fed President Kaplan to deliver speeches later in the day.

Eren Sengezer FXStreet

For the third straight day, the USD/JPY pair continues to trade in a very tight range below the 110 mark as the souring market sentiment doesn't allow the pair to take advantage of the broad-based USD strength. As of writing, the pair was down 0.12% on the day at 109.83.

With major European currencies having a difficult time finding demand, the greenback continues to outperform its rivals. The ECB in its latest Economic Bulletin noted that downside risks have increased in the euro area to weigh on the shared currency and the GBP extends its decline ahead of the BoE announcements. Ahead of speeches from the Fed's Clarida and the Dallas Fed President Kaplan in the NA session, the DXY is up 0.25% on the day at 96.60.

Meanwhile, European equity indices are falling sharply on Thursday to reflect a weak appetite for risk-sensitive assets, which helps the safe-haven JPY stay resilient. At the moment, the Euro Stoxx 50 and Germany's DAX are down 0.9% and 1.3%, respectively. Moreover, a 50 pip drop witnessed in the EUR/JPY pair confirms the rising demand for the JPY.

Technical levels to consider

The pair faces the initial resistance at 109.95/110 (50-DMA/psychological level) ahead of 110.50 (Dec. 31 high) and 111.50 (100-DMA/200-DMA). On the downside, supports are located at 109.50 (20-DMA), 109 (psychological level) and 108.50 (Jan. 31 low).

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.

EUR/USD onsolidates around mid-1.1800s as traders keenly await FOMC Minutes

The EUR/USD pair struggles to capitalize on the previous day's goodish rebound from the 1.1800 neighborhood, or a one-and-a-half-week low, and consolidates in a narrow band during the Asian session on Wednesday. Spot prices currently trade just below mid-1.1800s, nearly unchanged for the day.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold bounces back toward $4,900, looks to FOMC Minutes

Gold is attempting a bounce from the $4,850 level, having touched a one-week low on Tuesday. Signs of progress in US–Iran talks dented demand for the traditional safe-haven bullion, weighing on Gold in early trades. However, rising bets for more Fed rate cuts keep the US Dollar bulls on the defensive and act as a tailwind for the non-yielding yellow metal. Traders now seem reluctant ahead of the FOMC Minutes, which would offer cues about the Fed's rate-cut path and provide some meaningful impetus.

DeFi could lift crypto market from current bear phase: Bitwise

Bitwise Chief Investment Officer Matt Hougan hinted that the decentralized finance sector could lead the crypto market out of the current bear phase, citing Aave Labs’ latest community proposal as a potential signal of good things to come.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.