- The upbeat market mood undermined the safe-haven JPY and extended some support to USD/JPY.
- Retreating US bond yields kept the USD bulls on the defensive and capped the upside for the major.
- Investors now look forward to the US ISM Manufacturing PMI for some meaningful trading impetus.
The USD/JPY pair remained confined in a narrow trading band around mid-106.00s through the Asian session and consolidated its recent strong gains to multi-month tops.
A combination of diverging factors failed to provide any meaningful impetus to the major and led to subdued/range-bound price moves through the first half of the trading action on Monday. A fresh leg up in the equity markets undermined the safe-haven Japanese yen and extended some support to the USD/JPY pair. However, retreating US bond yields kept the US dollar bulls on the defensive and capped the upside for the major, at least for now.
The progress on a massive US fiscal spending plan added to the recent optimism about a strong global economic recovery. In fact, the House of Representatives passed US President Joe Biden's proposed $1.9 trillion relief package on Saturday and cleared the way to secure congressional approval. This comes amid the impressive pace of COVID-19 vaccinations and boosted investors' confidence, which, in turn, weighed on traditional safe-haven currencies.
On the other hand, the greenback was pressured by some follow-through pullback in the US Treasury bond yields from over one-year tops touched last week. This was seen as a key factor that kept a lid on any further gains for the USD/JPY pair. That said, the lack of any meaningful selling favours bullish traders and supports prospects for an extension of last week's strong positive move of over 150 pips from levels below the key 105.00 psychological mark.
Market participants now look forward to the US economic docket, highlighting the release of the ISM Manufacturing PMI. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus. Apart from this, traders might further take cues from the broader market risk sentiment to grab some short-term opportunities.
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
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.