- USD / JPY is witnessing some selling for the third day in a row on Friday.
- The sustained selling bias around the USD is seen as a key factor putting downward pressure on the pair.
- A rally in US bond yields and a rebound in equity markets do little to offer support.
The selling bias around the USD has accelerated during the European session on Friday and has dragged the USD / JPY pair to fresh three-day lows, around the 105.30 region. At the time of writing, the pair remains close to daily lows, consolidating the sharp decline.
The pair has witnessed some sales for the third day in a row on Friday and is now down around 100 pips from the five-month highs around the 106.20-25 region reached earlier this week. The fall is due exclusively to a general weakness of the US dollar. Disappointing initial US jobless claims on Thursday have raised questions about the pace of the US economic recovery, which in turn has been seen as a key factor weighing on the USD.
In the meantime, the pullback has not appeared to be affected by a solid rally in equity markets, which tends to weigh on demand for the Japanese yen safe haven. The pair’s bulls have even ignored a good rally in U.S. Treasury yields. In fact, the benchmark 10-year U.S. government bond yield has now approached highs of a year amid hopes that President Joe Biden’s proposed $ 1.9 trillion stimulus package will support a stronger economic recovery.
Therefore, it will be prudent to wait for a solid continuation of the selling before confirming that the recent rally in the pair may have been exhausted. This, in turn, would set the stage for a further short-term bearish move for the USD / JPY pair. The next relevant support is at the monthly lows, around the 104.40 region.. Should it break below that region it should be seen as a new trigger for the bears.
Market participants are now awaiting the US economic calendar, highlighting the release of the preliminary PMI (manufacturing and services) and existing home sales data. This, along with US bond yields, will influence USD price dynamics. Investors could follow the signs of the broader market risk sentiment to seize 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.
