USD/JPY remains on the defensive, decline looks supported ahead of US data.

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  • USD/JPY moves lower on Tuesday, snapping a two-day winning streak amid a modest dollar pullback.
  • The pullback in US bond yields turns out to be a key factor driving profit-taking around the dollar.
  • Risk appetite and policy divergence between the Fed and the Bank of Japan weigh on the JPY and limit losses.

The pair USD/JPY has difficulty capitalizing on the gains posted in the last two sessions and finds itself with fresh selling on Tuesday. The pair remains on the defensive during the early part of the European session and is currently trading around the area of ​​144.25-144.30.

The US dollar is pulling back from two-decade highs hit the previous day and is proving to be a key factor putting downward pressure on the USD/JPY pair. Bearish traders also take note of a modest pullback in US Treasury yields., leading traders to take some profit from their bullish USD positions. That said, a combination of factors extends some support to the pair and helps limit the decline.

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Despite the intervention of the Japanese government in the foreign exchange market, the wide divergence in the monetary policy stance adopted by the Bank of Japan continues to weigh on the Japanese yen. Furthermore, risk appetite, represented by a positive tone in equity markets, further weighs on the safe-haven Japanese yen. This, in turn, helps the USD/JPY pair. to stay above the 144.00 levelAt least for the moment.

Also, Prospects for more aggressive Fed monetary policy tightening favor USD bulls. The fundamental background suggests that the path of least resistance for the USD/JPY pair is to the upside and supports the prospect of some buying at lower levels. Market participants are now awaiting Fed Chairman Jerome Powell’s speech at an event in Paris to gain some momentum ahead of US macro data.

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Tuesday’s US economic docket includes the release of Durable Goods Orders, the Conference Board Consumer Confidence Index, New Home Sales and the Richmond Manufacturing Index. This, along with US bond yields, will influence the price dynamics of the dollar. Traders will follow signals from the broader risk sentiment to take advantage of some short-term opportunities around the USD/JPY pair.

USD/JPY technical levels

USD/JPY

Overview
last price today 144.24
today daily change -0.52
Today Daily variation % -0.36
Daily opening today 144.76
Trends
daily SMA20 142.51
daily SMA50 138.27
daily SMA100 135.6
daily SMA200 127.36
levels
Previous daily high 144.79
Previous Daily Low 143.25
Previous Weekly High 145.9
Previous Weekly Low 140.35
Previous Monthly High 139.08
Previous Monthly Low 130.4
Daily Fibonacci of 38.2% 144.2
Daily Fibonacci of 61.8% 143.84
Daily Pivot Point S1 143.74
Daily Pivot Point S2 142.73
Daily Pivot Point S3 142.21
Daily Pivot Point R1 145.28
Daily Pivot Point R2 145.8
Daily Pivot Point R3 146.82

Source: Fx Street

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