- USD / JPY remains under some selling pressure for the third day in a row on Thursday.
- Troubles around COVID-19, a weaker dollar and a decline in US bond yields contribute to the downward pressure on the pair.
- Investors are now waiting for Thursday’s US macroeconomic releases for a significant boost.
The pair USD/JPY it has moved lower during the Asian session on Thursday, staying close to the multi-week lows reached the day before. At the time of writing, the pair recovers initial losses and remains practically unchanged on the day around the 109.30-35 level.
The pair has struggled to capitalize on the previous day’s modest rebound from the 109.10 area, close to a month-long lows, and encountered further selling on Thursday. This marks the third consecutive day of negative movement and it is due to a combination of factors.
The softer US CPI report raised the uncertainty about the likely timing of the Fed’s bond purchase reduction plan and kept the US dollar bulls on the defensive during the early part of the trading action. This, in turn, was seen as a key factor that acted as a headwind for the USD / JPY pair.
On the other hand, concerns about the rapid spread of the Delta variant and a global economic slowdown benefited the safe haven Japanese yen. This, coupled with a modest decline in US Treasury yields, inspired bears and put pressure on the USD / JPY pair.
Meanwhile, the fall of the previous day confirmed a short-term bearish breakout below the support marked by the lower bound of a multi-week-old trading range near the 109.50-45 region. Therefore, the drop could be further attributed to some technical continuation sales.
That said, investors still seem convinced that the Fed would begin reversing its massive pandemic-era stimulus later this year. This should prevent investors from opening aggressive bearish positions before the FOMC meeting on September 20-21, which would help limit any further losses.
Market participants are now awaiting the US economic calendar, highlighting the release of monthly retail sales figures, the Philadelphia Fed Manufacturing Index and initial weekly jobless claims. Aside from this, US bond yields, price dynamics around the dollar, and broader market risk sentiment could generate some trading opportunities around the USD / JPY pair.
USD / JPY technical levels
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