- USD/JPY is back a few pips from the three-week highs reached this Monday.
- Risk aversion benefits the safe-haven JPY and acts as a headwind for the pair.
- A combination of support factors should help limit any significant intraday decline.
The pair USD/JPY It is struggling to capitalize on its modest opening gap higher and is down a few pips from the three-week highs near 132.50 hit earlier this Monday. At the time of writing, the pair is just below the 132.00 levelrising more than 0.50% on the day, and seems set to continue appreciating.
He risk averse environment, which is reflected in a weaker tone in the stock markets, supports the Japanese yen (JPY) and acts as a headwind for the USD/JPY pair. Having said that, News that Masayoshi Amamiya, Bank of Japan (BoJ) deputy governor and supporter of ultra-loose monetary policy, will take over as governor could slow the yen’s rise. Apart from this, the strong buying trail around the US dollar supports the prospects for a further short-term move higher for the pair and an extension of last week’s bounce from the 128.00 level.
The US NFP monthly jobs report released on Friday showed the economy added 517,000 jobs in January, beating consensus estimates by a wide margin. In addition, the unemployment rate unexpectedly fell to 3.4%, the lowest since May 1969. Meanwhile, average hourly earnings increased 0.3% month-on-month and 4.4% in the last 12 months, compared to 0.4% in the previous month. December and 4.9%, respectively. Nevertheless, the data was strong enough to allow the Federal Reserve to continue raising interest rateswhich in turn is seen as pushing up US Treasury yields and supporting the USD.
Fundamental undertones seem to lean in favor of bulls, suggesting that any significant decline could now be seen as a buying opportunity and is more likely to remain limited. In the absence of relevant US economic releases on Monday, US bond yields will continue to play a key role in dollar price dynamics. Beyond this, the broader risk sentiment will drive safe haven demand for the JPY and help produce short-term opportunities around the USD/JPY pair.
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.
