- USD/JPY pulls back from 118.45 highs but holds on to 118.00 ahead of FOMC.
- Mixed market sentiment keeps stocks swinging as US Treasury yields fall.
- USD/JPY Price Forecast: Tuesday’s price action is forming a doji, which means indecision of bulls and bears.
The USD/JPY it falls for the first time in seven days amid a mixed market mood, as illustrated by global equities fluctuating between winners and losers courtesy of geopolitical tensions. In the currency space, the Japanese yen is making up some ground against most of the G8 currencies except the risk barometer AUD. At time of writing, USD/JPY is trading at 118.14.
Conflict between Russia and Ukraine persists, talks continue
The latest developments in Eastern Europe point to the continuation of talks between Russia and Ukraine, although hostilities persist. Meanwhile, the Ukrainian air force claimed that a Russian drone crossed into Poland before returning to Ukraine, was shot down by air defenses, while the Russian Defense Minister reported that they had taken control of Kherson Ukraine, according to Sputnik.
US Treasury bond yields retreat and demand for the dollar decreases
Meanwhile, USD/JPY trades almost unchanged on the day, supported by falling US Treasury yields, led by the 10-year yield which fell three basis points to 2,110%. The dollar is trading at a loss, with the US Dollar Index below 99, at 98.79, down 0.21%.
An empty Japanese economic docket leaves USD/JPY traders leaning on US economic data. On the US front, February’s Producer Price Index (PPI) rose 10%, matching expectations. market expectations and holding at levels not seen since 1981. The data further cemented the need for higher rates as the Federal Reserve is due to release its statement on Wednesday at 18:00 GMT, followed by Powell’s press conference from the fed
USD/JPY Price Forecast: Technical Outlook
USD/JPY is showing a bullish bias, although Tuesday’s price action is forming a doji near yearly highs, meaning USD bulls are failing to commit to higher prices as the first rally looms. US central bank rates
If USD/JPY aims to move lower, the first support would be 118.00. A break of the latter would expose the 24-year downtrend line around 117.00, which once breached would leave the 4th January resistance/support at 116.35 as the next demand zone.
To the upside, the first resistance for USD/JPY would be at 118.45. A decisive break would push the pair towards 119.00, followed by 120.00.
Additional technical levels
Source: Fx Street
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