USD/JPY fails to take advantage of modest intraday bounce and remains below 140.00

• USD/JPY reverses an intraday decline and gains support from the appearance of dollar buying.
• A good intraday rally in US Treasury yields helps revive demand for dollars.
• Fears of intervention and a softer risk tone could support the yen and limit the pair’s gains.

The pair USD/JPY attracts some buying on dips near the 139.00 level on Tuesday and stops overnight pullback from a multi-day high. The pair maintains the intraday rise during the North American session and reaches a new daily high, approaching the key psychological level of 140.00 in the last hour.

As investors look past the disappointing US ISM services PMI release on Monday, the US dollar (USD) regains positive traction and turns out to be a key factor acting as a tailwind for the USD pair. /JPY. The USD’s intraday rise could be attributed to an intraday rally in US Treasury yields, although it is likely to remain limited on growing bets on an imminent pause in the policy tightening cycle. from the Federal Reserve.

In fact, markets are pricing in a higher probability that the US central bank will leave interest rates unchanged at the end of a two-day policy meeting on June 14. This could stop USD bulls from making aggressive bets. Apart from this, the prospect of Japanese authorities intervening in the markets could further help to keep any significant appreciation move in the USD/JPY limited, at least for the time being.

In addition, the cautious climate prevailing in equity markets could benefit the yen as a safe haven. That being said, a more dovish stance from the Bank of Japan could continue to weaken the yen and limit the USD/JPY’s decline. In the absence of any relevant US macroeconomic data, the mixed fundamental background warrants the caution of aggressive traders.

technical levels