- USD/JPY pulls back from a 1-month high and is pressured by a combination of factors.
- News about Japan’s intervention in the foreign exchange market and the risk-off environment benefit the safe-haven JPY.
- Modest USD weakness contributes to the downside, although downside risk appears limited.
The pair USD/JPY has come under some selling pressure on Tuesday and has given back some of the previous day’s gains from the 133.00 zone, a one-month high. The pair remains under pressure during the first half of the European session and weakens below the 132.00 levelmarking a new daily low in the last hour near 131.70.
A combination of factors is helping to reignite demand for the Japanese yen (JPY), which, coupled with a modest US dollar pullback, is putting downward pressure on the USD/JPY pair. Japan’s Ministry of Finance confirmed stealth intervention in foreign exchange markets to support the national currency. Apart of this, Speculation about an eventual hawkish inclination by the Bank of Japan (BoJ) and the prevailing risk-off environment offers further pressure on the pair and offers additional support to the safe-haven JPY.
On the other hand, USD halts strong rally of last week following the release of the upbeat US NFP report and acts as a headwind for the USD/JPY pair. However, expectations that the Federal Reserve will maintain its aggressive stance cushion the fall of the dollar. These expectations were boosted by excellent US jobs data on Friday, which pointed to underlying strength in the labor market and should allow the Fed to continue raising interest rates.
Hence the focus is on the Fed Chairman’s speech, Jerome Powell, scheduled for later during the American session. Powell’s comments on inflation and monetary policy could offer clues as to the path of the Fed’s rate hikes. This, along with US bond yields, will influence dollar price dynamics. Aside from this, broader risk sentiment should provide some momentum for the USD/JPY pair. Meanwhile, the mixed fundamental background warrants some caution before positioning for further intraday losses.
USD/JPY technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
