- USD/JPY gains some positive traction and stages a goodish rebound from over a one-week low.
- A positive risk tone is seen undermining the safe-haven JPY and acting as a tailwind for the pair.
- Bets for less aggressive Fed rate hikes keep the USD bulls on the defensive and might cap gains.
The USD/JPY pair attracts some buying on Friday and recovers a part of the previous day's losses to the 138.00 neighbourhood, or a one-and-half-week low. The pair sticks to intraday gains through the first half of the European session and is currently placed near the top end of its daily range, just below the 139.00 mark.
A generally positive tone around the equity markets undermines the safe-haven Japanese yen, which, in turn, is seen as a key factor offering some support to the USD/JPY pair. Apart from this, a more dovish stance adopted by the Bank of Japan is seen weighing on the domestic currency and acting as a tailwind for the major. The uptick, however, lacks bullish conviction and runs the risk of fizzling out rather quickly amid the underlying bearish sentiment surrounding the US Dollar.
The November FOMC meeting minutes released on Wednesday revealed that officials were largely satisfied they could stop front-loading the rate increases and move in smaller steps. This, in turn, cements bets for a 50 bps lift-off at the next FOMC meeting in December and is evident from the ongoing downfall in the US Treasury bond yields. The resultant narrowing of the US-Japan rate differential is benefitting the JPY and keeping a lid on any meaningful recovery for the USD/JPY pair.
Furthermore, a surge in core consumer prices in Japan's capital - to their fastest annual pace in 40 years in November - cast doubt on the BoJ's view that recent cost-push inflation will prove transitory. This might further hold back traders from placing aggressive bullish bets around the USD/JPY pair amid relatively thin trading volumes. This makes it prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out in the near term.
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 alternates gains with losses near 1.0720 post-US PCE
The bullish tone in the Greenback motivates EUR/USD to maintain its daily range in the low 1.070s in the wake of firmer-than-estimated US inflation data measured by the PCE.
GBP/USD clings to gains just above 1.2500 on US PCE
GBP/USD keeps its uptrend unchanged and navigates the area beyond 1.2500 the figure amidst slight gains in the US Dollar following the release of US inflation tracked by the PCE.
Gold keeps its daily gains near $2,350 following US inflation
Gold prices maintain their constructive bias around $2,350 after US inflation data gauged by the PCE surpassed consensus in March and US yields trade with slight losses following recent peaks.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.