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USD/JPY trades with modest intraday losses, manages to hold above 151.00 mark

  • USD/JPY meets with some supply on Thursday and reverses a part of the overnight strong move up.
  • Intervention fears, along with the cautious mood, underpin the JPY and exert pressure on the major.
  • The Fed-BoJ policy divergence should continue to act as a tailwind for the pair and help limit losses.

The USD/JPY pair struggles to capitalize on the previous day's rally of around 140 pips from the 150.00 psychological mark, or over a one-week low and edges lower during the Asian session on Thursday. Spot prices currently trade around the 151.15 area, down nearly 0.15% for the day, though any meaningful downfall seems elusive.

The US Dollar (USD) looks to build on the overnight recovery move from its lowest since September 1 amid the uncertainty over the Federal Reserve's (Fed) next policy move, which, in turn, should act as a tailwind for the USD/JPY pair. The softer US CPI report released on Tuesday showed that consumer inflation was cooling faster than anticipated and reaffirmed expectations that the Fed is done raising interest rates. That said, the pace of inflation remains well above the 2% target and keeps hopes alive that the US central bank will stick to its hawkish stance.

In contrast, the Bank of Japan (BoJ) is the only major central bank in the world to maintain negative interest rates and so far, has shown no signs of moving away from decades of unprecedented easing measures. Furthermore, the dismal domestic GDP report released on Wednesday, showing that the economy contracted for the first time in three quarters, should allow the BoJ to delay any policy shift away from its massive monetary easing stance. This, in turn, could undermine the Japanese Yen (JPY) and contribute to limiting losses for the USD/JPY pair.

That said, a mildly softer tone around the US equity futures, along with speculations that Japanese authorities could intervene in the FX market to combat any sustained depreciation of the domestic currency, could lend support to the safe-haven JPY. This, in turn, might continue to act as a headwind for the USD/JPY pair. The mixed fundamental backdrop, meanwhile, warrants some caution before placing aggressive directional bets. Traders now look to the US economic docket, featuring Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Industrial Production figures.

Technical levels to watch

USD/JPY

Overview
Today last price151.18
Today Daily Change-0.24
Today Daily Change %-0.16
Today daily open151.42
 
Trends
Daily SMA20150.44
Daily SMA50149.34
Daily SMA100146.39
Daily SMA200141.2
 
Levels
Previous Daily High151.42
Previous Daily Low150.05
Previous Weekly High151.6
Previous Weekly Low149.35
Previous Monthly High151.72
Previous Monthly Low147.32
Daily Fibonacci 38.2%150.89
Daily Fibonacci 61.8%150.57
Daily Pivot Point S1150.5
Daily Pivot Point S2149.59
Daily Pivot Point S3149.14
Daily Pivot Point R1151.87
Daily Pivot Point R2152.33
Daily Pivot Point R3153.24

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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