- USD/JPY recovered much of its intraday losses, although it lacked follow-through.
- Risk appetite undermined the safe haven JPY and extended some support to the pair.
- The dollar’s price action, which was very weak, failed to provide momentum and held onto the gains.
On Thursday, the pair USD/JPY attracted some buying around 126.50 and regained some lost ground. The intraday rally pushed the price back above the 127.00 level during the early North American session, although it did not continue.
The risk appetite boost, represented by a generally positive tone around equity markets, undermined the safe haven Japanese Yen and was seen as a key factor in extending some support to the USD/JPY pair. However, concerns over weakening global economic growth dampened the upbeat move, which, coupled with weak demand for US dollars, acted as a headwind for the pair.
Speculation that the Federal Reserve might pause the interest rate hike cycle later this year pushed the 10-year Treasury yield to a new six-week low. This, in turn, did not help the dollar to take advantage of the overnight rebound from the monthly low. Even the mixed macroeconomic data out of the US also failed to impress dollar bulls or provide any lift to the USD/JPY pair.
The preliminary US GDP report showed that the world’s largest economy contracted at an annualized rate of 1.5% during the first quarter of 2022, against the advance estimate of a 1.4% drop. The slight disappointment in retrospective data was somewhat offset by better-than-expected weekly jobless claims, which fell to 210,000 last week from 218,000 previously.
The pair, so far, have managed to hold above the monthly low. This, in turn, makes it prudent to wait for some follow-up selling before positioning yourself for further losses.
Technical levels
Source: Fx Street
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