- USD/JPY finds new selling on Tuesday amid modest USD weakness.
- Risk appetite weighs on the safe-haven JPY and helps limit the pair’s decline.
- The fundamental undercurrent warrants some caution for aggressive bulls.
The pair USD/JPY comes under renewed selling pressure on Tuesday and reverses a significant portion of the previous day’s rally gains. However, the pair manages to recover from daily low near 130.50 and rally back towards 131.20 during the European session.
He prevailing risk appetiteas shown by the overall positive tone around the stock markets, weighs on the safe-haven Japanese Yen (JPY) and turns out to be a key factor lending some support to the USD/JPY pair. The acquisition of Silicon Valley Bank by the First Citizens Bank & Trust Company from the Federal Deposit Insurance Corporation (FDIC) helps calm market nerves about the risk of contagion. In addition, regulators have ensured that they are prepared to deal with any liquidity shortfalls, further boosting investor appetite for perceived riskier assets. That being said, a combination of factors warrants some caution before entering aggressively bullish positions around the pair.
The Expectations that the Bank of Japan (BoJ) will tweak its bond yield control policy and scale back its massive stimulus under new Governor Kazuo Ueda could limit yen losses. Apart from this, modest US dollar (USD) weakness could further help to hold off any significant rally for the USD/JPY pair. The Federal Reserve’s signal last week that it could soon pause the rate hike cycle The recent turbulence in the banking sector has caused a further drop in US Treasury yields. This, in turn, drags the dollar lower for the second day in a row and puts some downward pressure on the dollar. the pair.
Therefore, it would be prudent to wait for a strong continuation of buying before positioning for an extension of the recent USD/JPY rebound from the 129.65 region, or the lowest since Feb 3 hit last week. Market participants now turn to the US economic agenda, with the release of the Conference Board’s Consumer Confidence Index and the Richmond Manufacturing Index. Additionally, US bond yields could influence dollar price dynamics, which together with broader risk sentiment could create near-term opportunities around the pair.
USD/JPY technical levels to watch
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.
