USD/JPY pulls away from 1-week low and rises to daily highs above the 139.00 level

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  • USD/JPY is gaining a bit of positive traction and posting a nice bounce from a 1-week low.
  • A positive risk tone weighs on the safe-haven JPY and benefits the pair’s move higher.
  • Less hawkish Fed rate hike expectations keep USD bulls on the back foot and could limit the pair’s gains.

The pair USD/JPY it attracts some buying on Friday and recovers a portion of the previous day’s losses to the 138.00 area, or a 1.5-week low. The pair is holding on to intraday gains during the first half of the European session and is currently hovering near the upper end of its daily range, just above the 139.00 level.

A Generally positive tone around stock markets weighs on Japanese yen of safe haven, which in turn is seen as a key factor offering some support for the USD/JPY pair. Also, the more dovish stance taken by the Bank of Japan weighs on the national currency and acts as a tailwind for the pair. However, the rally lacks bullish conviction and risks fading quickly amid the bearish sentiment surrounding the US dollar.

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The minutes of the November FOMC meeting, released on Wednesday, revealed that officials were pleased with be able to stop pre-empting rate hikes and move forward in smaller steps. This, in turn, consolidates expectations for a rise of 50 basis points at the next FOMC meeting in December and is evident in the ongoing decline in US Treasury yields. The resulting narrowing in the US-Japan rate differential is benefiting the yen, keeping any significant USD/JPY rally at bay.

Meanwhile, rising consumer prices in the Japanese capital, which reached their fastest annual pace in 40 years in November, cast doubt on the Bank of Japan’s view that recent cost-driven inflation will be transitory. This could further discourage investors from taking aggressively bullish positions around the USD/JPY pair amid relatively light trading volume. Therefore, it is prudent to wait for strong continuation buying before confirming that the pair has bottomed in the short term.

USD/JPY technical levels

USD/JPY

Panorama
Last Price Today 139.1
Today’s Daily Change 0.58
Today’s Daily Change % 0.42
Today’s Daily Open 138.52
Trends
20 Daily SMA 143.29
SMA of 50 Daily 144.84
SMA of 100 Daily 141.14
SMA of 200 Daily 133.84
levels
Previous Daily High 139.65
Minimum Previous Daily 138.05
Previous Weekly High 140.8
Previous Weekly Minimum 137.67
Maximum Prior Monthly 151.94
Minimum Prior Monthly 143.53
Daily Fibonacci 38.2% 138.66
Daily Fibonacci 61.8% 139.04
Daily Pivot Point S1 137.83
Daily Pivot Point S2 137.13
Daily Pivot Point S3 136.22
Daily Pivot Point R1 139.43
Daily Pivot Point R2 140.35
Daily Pivot Point R3 141.04

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Source: Fx Street

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