- USD/JPY attracted some dip-buying near the 105.85 region amid a broad-based USD strength.
- The risk-off mood extended some support to the safe-haven JPY and might cap any further gains.
The USD/JPY pair managed to rebound over 30 pips from the Asian session lows and was last seen trading in the neutral territory, around the 106.15-20 region.
The pair witnessed a modest intraday pullback from the 106.40-45 region, or fresh five-month tops amid a fresh wave of the global risk-aversion trade, which tends to underpin the safe-haven Japanese yen. However, a broad-based US dollar strength helped limit the downside, rather assisted the USD/JPY pair to attract a fresh buying near the 105.85 region.
As investors digested Fed Chair Jerome Powell's dovish remarks during the congressional testimony, the USD was back in demand amid a sudden spike in the US Treasury bond yields. The US bond market has been reacting strongly to the progress on a massive US fiscal spending plan and the impressive pace of COVID-19 vaccinations globally.
The House version of the US President Joe Biden's proposed $1.9 trillion pandemic relief package is expected to get a vote as soon as Friday or over the weekend. Adding to this, the US Food and Drug Administration indicated that it could grant emergency use approval to Johnson & Johnson's COVID-19 vaccine by the end of this week.
The developments continued fueling reflation trade and pushed the yield on the benchmark 10-year US government bond beyond 1.50%, to more than one-year highs. This was seen as a key factor that provided a strong lift to the greenback. Meanwhile, the emergence of some dip-buying favours bullish traders and supports prospects for additional gains.
Market participants now look forward to the US economic docket, featuring the releases of Core PCE Price Index, Personal Income/Spending data, Goods Trade Balance and Chicago PMI. This, along with the US bond yields, will influence the USD. Apart from this, the broader market risk sentiment might produce some trading opportunities around the USD/JPY pair.
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 regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.