USD/JPY traces sluggish yields above 130.00 as Yen traders await BoJ Summary, US GDP and Fed

  • USD/JPY prints mild gains after reversing from weekly top the previous day.
  • Yields remain sidelined as traders await more clarity on growth prospects, Fed moves.
  • US PMIs were mixed but downbeat equities and higher prints of inflation data elsewhere allowed yields/USD to defend Yen buyers.
  • Light calendar ahead of US GDP, FOMC restricts immediate moves.

USD/JPY floats above 130.00, printing mild gains around 130.30 by the press time, amid sluggish markets on early Wednesday. In doing so, the Yen pair takes clues from the inactive Treasury bond yields amid a lack of data/events at home. Also likely to restrict the quote’s immediate moves could be the market’s cautious mood ahead of the Bank of Japan's (BOJ) Summary of Opinions and US Gross Domestic Product (GDP) for the fourth quarter (Q4), not to forget the next week’s Federal Open Market Committee (FOMC) meeting.

That said, the US 10-year Treasury bond yields drop 1.5 basis points (bps) to 3.45% while the two-year counterpart posted the biggest daily loss in a week around the 4.15% level. It should be noted that the S&P 500 Futures drop half a percent to 4,012, extending the previous day’s U-turn from the 1.5-month high.

While Wall Street’s mixed closing and the US Dollar’s failure to cheer the improvement in January PMI underpin USD/JPY weakness, together with hawkish bias from the BoJ, the market’s preparations for the next week’s Fed meeting propel the Yen pair.

It should be noted that Tuesday’s technical glitch joined the mixed earnings report to confuse equity traders the previous day. “Fourth quarter earnings season is in full swing, with 72 of the companies in the S&P 500 having reported. Of those, 65% have beaten consensus, just a hair below the 66% long-term average, according to Refinitiv,” said Reuters.

On the other hand, the US Dollar Index (DXY) remains pressured as the US activity data for January remained below 50.0 level and suggested contraction despite improving a bit.

The US PMIs moderated in the last few months but the growth is yet to witness as January’s US S&P Global Composite PMI for January increased to 46.6 from 45.0 prior and the 44.7 consensus, marking the seventh consecutive read below 50. It’s worth observing that preliminary readings of the US S&P Global Manufacturing PMI for January rose past 46.2 market forecast and 46.1 market expectations with 46.8 figure while the Services PMI followed the suit with the 46.6 figure for the said month, versus 44.5 forecast and 44.7 prior.

Amid these plays, Fed fund futures signal the market’s receding hawkish bias. “Fed fund futures see only two more quarter-point rate hikes by the Fed to a peak of around 5% by June, before it starts cutting rates later in the year. The Federal Reserve itself has insisted it still has 75 bps of increases in the pipeline,” said Reuters.

To sum up, USD/JPY portrays the typical pre-data anxiety while defending the 130.00 round figure. However, bears have an upper hand considering the hawkish bias surrounding BoJ.

Technical analysis

A two-month-old bearish channel restricts USD/JPY moves between 132.00 and 125.90.

Additional important levels

Today last price 130.32
Today Daily Change 0.16
Today Daily Change % 0.12%
Today daily open 130.16
Daily SMA20 130.84
Daily SMA50 134.44
Daily SMA100 139.87
Daily SMA200 136.74
Previous Daily High 131.12
Previous Daily Low 129.73
Previous Weekly High 131.58
Previous Weekly Low 127.22
Previous Monthly High 138.18
Previous Monthly Low 130.57
Daily Fibonacci 38.2% 130.26
Daily Fibonacci 61.8% 130.58
Daily Pivot Point S1 129.55
Daily Pivot Point S2 128.94
Daily Pivot Point S3 128.16
Daily Pivot Point R1 130.94
Daily Pivot Point R2 131.72
Daily Pivot Point R3 132.33



Share: Feed news

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

Recommended content

Editors’ Picks

AUD/USD bounces back from five-month lows

AUD/USD bounces back from five-month lows

AUD/USD ends its three-day decline on Wednesday, bouncing back from levels not seen since mid-November. Nevertheless, hawkish remarks from Federal Reserve officials and the influx of safe-haven flows could bolster the US Dollar and potentially limit the upside of pair in the short term.


USD/JPY trades with mild losses below 155.00 on risk-aversion

USD/JPY trades with mild losses below 155.00 on risk-aversion

USD/JPY trades with mild losses near 154.65 on Wednesday during the early Asian trading hours. The robust US economy and sticky inflation data have triggered the expectation that the Fed might delay the easing cycle to September from June, which provides some support to the US Dollar.


Gold ascends but remains shy of testing $2,400 amid hawkish Fed remarks

Gold ascends but remains shy of testing $2,400 amid hawkish Fed remarks

Gold prices edged higher late in North American session, gaining 0.22% following a hawkish tilt by Fed Chair Jerome Powell. Economic data from the United States was mixed, though Monday’s Retail Sales report and Powell’s remarks kept US Treasury yields higher, capping the yellow metal’s advance.

Gold News Price Prediction: FET must hold above $1.70 for strength Price Prediction: FET must hold above $1.70 for strength is trading with a bearish bias. It comes as chatter about the proposed integration with the Ocean Protocol and the SIngularityNET ecosystem remains fresh.

Read more

UK CPI March Preview: Inflation pressures to dissipate further, adding to bets of BoE rate cuts

UK CPI March Preview: Inflation pressures to dissipate further, adding to bets of BoE rate cuts

The March UK CPI report will be released by the Office for National Statistics on Wednesday. United Kingdom’s headline and core annual inflation are set to ease in March. The UK CPI report could hint at the BoE’s interest rate cut, rocking the Pound Sterling.

Read more