- US dollar falls across the board amid risk appetite.
- The de-escalation in Ukraine and the hopes of more talks trigger a setback.
- USD/JPY falls despite rising US yields.
The USD/JPY fell during the US session to 115.54, hitting a fresh daily low and quickly recovering towards the 115.80 area. The improvement in market sentiment weighs on the US dollar and the yen.
The dollar, as measured by DXY, is falling for the second day in a row, pulling back from multi-year highs. It bottomed out near 98.00 after reaching levels near 99.50 on Monday. The USD/JPY decline was triggered by dollar weakness but, at the same time, higher US yields limited losses. The US 10-year yield hit weekly highs of 1.92% and the 30-year yield hovers around 2.25%.
Range prevails despite volatility
Volatility has been the rule in the financial markets in recent days. Price action across currency pairs includes sharp declines and rebounds, but USD/JPY remains relatively calm, averaging daily moves.
If USD/JPY finally confirms a break above 115.80, then there could be some directional movement on the cards, including the possibility of going above 116.00 and higher. If the pair fails and stays range bound then it looks likely to slide towards the 114.70 area over the next couple of days.
With US inflation data due tomorrow and the FOMC meeting next week, and also considering that the upper bound of the range is currently being tested, the odds of a clearer move are increasing.
Technical levels
Source: Fx Street
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