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USD / JPY clings to post-US data gains, holding below 114.00

  • USD / JPY gained positive traction on Friday and broke two days of the losing streak.
  • A strong rally in US bond yields revived demand for the USD and kept the pair supported.
  • The US PCE price index did little to impress the bulls or give the pair any boost.

The pair USD/JPY It maintained the tone offered during the early American session and was last seen near the daily highs, just below 114.00. The pair moved shortly after the release of the US PCE price index.

After an initial drop to the 113.40-35 region, the USD / JPY pair attracted some buying on the last day of the week and broke two consecutive days of the losing streak. The move was sponsored by a strong rally in US Treasury yields, which helped the US dollar rebound from the month-long lows hit in reaction to the depressing release of US GDP. Thursday.

The US dollar held firm and reacted fairly dovishly to a slight disappointment in the US core PCE price index, which held steady at a 3.6% year-on-year rate in September, versus an anticipated 3.7% rally. . However, the data validated the expectations of an early policy adjustment by the Fed and allowed the yield of the US 10-year bonds to remain stable above 1.60%. This, in turn, acted as a tailwind for the dollar and the USD / JPY pair.

Meanwhile, the Fed’s inflation gauge indicated that pressures on consumer costs are taking hold. This is due to signs of an economic slowdown and concerns about the risk of stagflation, which could continue to affect investor sentiment. This should contain any bullish movement in the markets and benefit the Japanese yen as a safe haven, limiting any significant upside potential for the USD / JPY pair, at least for the time being.

Therefore, it will be prudent to wait for a strong follow-up buy beyond 114.00 before confirming that the recent corrective pullback has run its course. This will set the stage for a move past the multi-year highs, around the 114.70 region touched last week, and will push the USD / JPY pair further towards the recovery from the key psychological level 115.00.

Technical levels

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