- The yen rises throughout the market on Monday.
- Climate of caution boosts both dollar and yen.
- USD/JPY loses strength and falls after two days of significant gains.
USD/JPY is falling on Monday, despite Treasury yields remaining near highs and the dollar showing some strength. The pair trades at 114.96, the low for the day, after failing to break above 115.30 hours ago.
JPY advances in the market
At the start of the week, the yen held firm, possibly underpinned by the cautious mood in the markets. USD/JPY falls even despite the rise in DXY trading at 95.60, up 0.12% for the day as the 10-year rate is at 1.92%, just below Friday’s peak.
Friday’s US employment data was better than expected, confirming expectations of monetary tightening by the Federal Reserve. Furthermore, last week both the Bank of England and the European Central Bank gave signs that the road ahead is one of adjustment. The Bank of Japan is one of the few left on the other side, firm with its very expansionary policies.
short-term outlook
The recoil of USD/JPY on Monday comes after two days of significant gains. the pair again could not close above 115.35 and lost momentum. Below 115.00, the next strong support can be seen at 114.70 followed by 114.40 (55-day moving average).
If it manages to break and sustain above 115.35, the dollar will be positioned to extend the upward run, shifting the focus to the late January high at 115.67.
Technical levels
Source: Fx Street
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