The USD/JPY pair extended its sideways price move through the first half of the European session and remained confined in a range below the key 115.00 psychological mark.
The pair struggled to capitalize on its modest intraday uptick to a four-and-half-year peak and now seems to have entered a bullish consolidation phase. A softer tone around the equity markets benefitted the Japanese yen's safe-haven status, which, in turn, was seen as a key factor that acted as a headwind for the USD/JPY pair.
On the other hand, the US dollar witnessed some profit-taking from a 16-month high touched earlier this Wednesday. This was seen as another factor that kept a lid on any meaningful upside for the USD/JPY pair. However, the downside remains cushioned amid the recent widening of the US-Japanese government bond yield differential.
The markets have been pricing in the possibility for an early Fed rate hike amid worries about rising inflation. The speculations pushed the yield on the benchmark 10-year US bond back closer to the 1.65% threshold. Conversely, the yield on the 10-year Japanese government bond remained near zero due to the Bank of Japan's yield curve control policy.
The fundamental backdrop seems tilted in favour of bullish traders, though it will be prudent to wait for a sustained strength beyond the 115.00 mark before positioning for any further gains. Market participants now look forward to the US housing market data – Building Permits and Housing Starts – due later during the early North American session.
This, along with speeches by influential FOMC members and the US bond yields, will drive the USD demand and provide some impetus to the USD/JPY pair. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities around the major.
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.