- The USD / JPY consolidates the sharp decline this week to monthly lows.
- The USD remains under pressure near the two-week lows, limiting the pair’s rise.
- Risk appetite sentiment weighs on the JPY and offers some support to the pair.
The pair USD/JPY lacks a firm directional bias and remains trapped within a narrow range, just above the 104.50 level, during the European session on Thursday.
A combination of divergent factors has failed to provide significant momentum to the pair and has led to moderate price action and limited within a range for the second day in a row Thursday. The US dollar remains weak near the two-week lows, which in turn has been seen as a key factor limiting the rise in the USD / JPY pair.
The weakest consumer inflation figures in the US. posted on wednesday, along with moderate comments from the Fed ChairmanJerome Powell have kept the USD bulls on the defensive near two-week lows. Powell said that the labor market is far from fully recovering and that the Fed is not considering raising interest rates from current levels near 0%.
Having said that, underlying bullish sentiment in financial markets has weighed on demand for the safe haven Japanese yen and it has helped limit the decline in the USD / JPY pair. Global risk sentiment remains underpinned by progress on coronavirus vaccines and expectations of massive US fiscal spending.
Apart of this, a modest rally in US Treasury yields has offered some support for the USD / JPY pair. This makes it prudent to wait for some solid continuation selling, below monthly lows around the 104.40 region touched on Wednesday, before investors begin to position themselves for an extension of the recent downward move.
Market participants are now awaiting the release of US initial jobless claims data for further momentum at the start of the American session. Investors could follow the signs of broader market risk sentiment, US bond yields, and USD price dynamics to capture some short-term opportunities.
USD / JPY technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
