- Sovereign bond yields fall after central bank meetings.
- Risk appetite deteriorates after Wall Street opening bell.
- USD/JPY remains above the key 128.00 technical zone.
The USD/JPY it continued to fall on Thursday and bottomed at 128.07, reaching the lowest level in two weeks. It held above 128.00 and pared losses after the open of the US markets.
The move lower came amid deteriorating market sentiment that supported the dollar overall. The pair has returned to above 128.50, although it is still down on the day, heading for the third consecutive daily loss.
Bond recovery, yen benefits
Both the Bank of England and the European Central Bank raised key interest rates by 50 basis points, as expected. On Wednesday, the Federal Reserve raised its rate by 25 basis points. Central bankers showed more optimism on the economy. Powell signaled further rate hikes to bring the rate to an “appropriately restrictive” level. The ECB announced its intention to raise 50 basis points in March.
Following the announcements, sovereign bonds rose, favoring the Japanese yen overall. The yield on the US 10-year debt fell to 3.33%, the lowest level in two weeks, before rebounding to 3.37%. The German 10-year bond yield stood at 2.10%, down 6.70% on the day. The yield on British 10-year bonds falls by 5.95% and stands at 3.09%.
Despite the USD/JPY pair moving away from lows, the yen is trading at daily highs overall. The US dollar has rallied strongly over the past several hours, erasing most of the FOMC losses.
Central banks countered US data on Thursday, but the Non-Farm Payrolls report will be released on Friday and will be closely watched. Data released Thursday showed initial claims for jobless benefits unexpectedly fell to 183,000, the lowest level since April. Factory orders rose 1.8% in December, below the 2.2% expected.
Levels to watch
USD/JPY managed to hold above 128.00, a key technical level. The dollar needs to recover the 129.10 area to gain support. Above next resistance lies at 129.80 followed by the weekly high at 130.55.
A consolidation below 128.00 would increase bearish pressure, exposing the next support seen at 127.55.
technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
