|

USD/JPY trims losses near 133.50 amid dicey yields, defensive BoJ talks, US GDP eyed

  • USD/JPY bounces off intraday low to pare recent losses during three-day downtrend.
  • BoJ Officials keep favoring easy money policy, push back the need to alter YCC.
  • US House of Representatives passed a bill to kick-start debt ceiling negotiations.
  • Market fears due to First Republic Bank’s performance can weigh on Yen pair ahead of US Q1 GDP.

USD/JPY picks up bids to consolidate recent losses around mid-133.00s as markets brace for the US Q1 GDP during early Thursday. Adding strength to the corrective bounce could be the cautious optimism surrounding the US debt ceiling extension and the Bank of Japan (BoJ) Officials’ defense of the current ultra-easy monetary policy.

Following the passages of the "Limit, Save, Grow Act", the White House spokesperson said that President Joe Biden has made clear this bill has no chance of becoming law. The same challenges the initial optimism surrounding the bill amid fears of long and difficult discussion on the key matter. Even so, Reuters said that the US House of Representatives on Wednesday narrowly passed a bill to raise the nation's $31.4 trillion debt ceiling, defying President Joe Biden by attaching sweeping spending cuts for the next decade.

It should be noted that former BoJ Deputy Governor Masazumi Wakatabe recently mentioned that he will be surprised if the BoJ changes Yield Curve Control (YCC) on Friday. Previously, Bank of Japan´s (BoJ) Governor Kazuo Ueda spoke in the Japanese Parliament, known as Diet, while saying that the risk of a rise in inflation driven by lost of market trust in Japan's finances low for now. The policymaker also tried to tame talks of inflation woes and indirectly suggests no change in this week’s monetary policy meeting, not even surrounding the YCC.

Elsewhere, mixed US data and equity market performance also trouble the USD/JPY pair as the US Durable Goods Orders rose but the details of the Consumer Confidence eased. Furthermore, the tech giants allowed Nasdaq to remain firmer but the escalating fears from the First Republic Bank (FRB), due to another 20% share price fall on Wednesday following a 50% slump the previous day weigh on the sentiment.

Against this backdrop, US Treasury bond yields remain directionless while the S&P 500 Futures print mild gains of 0.20% around 4,083 by the press time, following a mixed close of Wall Street.

Looking forward, USD/JPY traders should pay attention to the risk catalysts, mainly surrounding the banks and US debt ceiling, while waiting for the US first quarter (Q1) Gross Domestic Product (GDP), expected to ease to 2.0% on an annualized basis versus 2.6% prior.

Technical analysis

A convergence of the previous support line from early April and a one-week-old resistance line, around 134.15, restricts the short-term recovery of the USD/JPY pair. The downside moves, however, remain elusive beyond a one-month-old ascending trend line, close to 132.65.

Additional important levels

Overview
Today last price133.55
Today Daily Change-0.12
Today Daily Change %-0.09%
Today daily open133.67
 
Trends
Daily SMA20133.25
Daily SMA50133.79
Daily SMA100132.92
Daily SMA200137.01
 
Levels
Previous Daily High133.94
Previous Daily Low133.01
Previous Weekly High135.14
Previous Weekly Low133.55
Previous Monthly High137.91
Previous Monthly Low129.64
Daily Fibonacci 38.2%133.37
Daily Fibonacci 61.8%133.59
Daily Pivot Point S1133.14
Daily Pivot Point S2132.62
Daily Pivot Point S3132.22
Daily Pivot Point R1134.07
Daily Pivot Point R2134.47
Daily Pivot Point R3135

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Editor's Picks

AUD/USD sits at three-week highs above 0.7000 on hawkish RBA-speak

AUD/USD holds a positive bias for the fourth straight day, trading above 0.7000 in the Asian session on Wednesday and at three-week highs. RBA Deputy Governor Andrew Hauser's hawkish remarks and inflation concerns underpin the pair. However, the upside appears capped as the US Dollar attracts some buyers amid looming US-Iran uncertainty.

USD/JPY remains confined in a familiar range below 158.50

USD/JPY sees some dip-buying in the Asian session on Wednesday, though it remains confined within a multi-week range near 158.50 as the uncertainty over the timing of the next BoJ rate hike keeps Japanese Yen bulls on the defensive. Meanwhile, hawkish Fed expectations, bolstered by inflation risks stemming from volatile oil prices, underpin the US Dollar. However, looming intervention fears could limit JPY losses and cap the currency pair.

Gold bounces off weekly low; Fed hike bets and modest USD recovery keep upside limited

Gold recovers slightly from the weekly low, around the $4,100 neighborhood, though the upside potential seems limited amid a bearish fundamental backdrop. Inflation risks stemming from volatile oil prices underpin prospects for further policy tightening by the US Federal Reserve. Furthermore, a modest US Dollar recovery from a near three-week low could contribute to capping bullion.

Zcash's bullish reversal eyes $1,698 peak on NU7 upgrade
Zcash (ZEC) shows signs of bullish recovery above $1,200 on Wednesday, following a 9% rebound the previous day linked to the upcoming NU7 upgrade. Blockworks released a Zcash holders report on Tuesday, highlighting steady network growth. The technical outlook for ZEC is bullish, with bulls eyeing an extended rally toward $1,698.
US – Midterm update: Pre-election tail risk scenarios
With two weeks until the US midterm elections on 3 November, early voting has already opened in more than 40 states. Prediction markets are broadly unchanged since we published our Midterm update, 13 October. The prediction market Polymarket continues to see Democrats winning both chambers as the most likely outcome, with a 62.5% probability.
The US Dollar fell. Gold didn't rally. That tells you everything
Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.