USD / JPY retreats to 114.60 from highs in years

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  • The dollar loses some strength before the American session.
  • Treasury yields remain near recent highs.
  • USD / JPY maintains an upward trend, down seen as a correction.

The USD / JPY is making a pullback after rising in the hours of the Asian session to 114.96, the highest level since March 2017. The pair turned negative for the day and fell to 114.60, the new daily low.

USD / JPY declines picked up pace amid a widespread intraday correction in the dollar. The DXY retreated from levels above 96.00 to 95.85, and is yielding 0.05%. Despite this fall, the upward trend remains firm both in the pair and for the dollar in general.

The expectation of a need for monetary tightening by the Federal Reserve earlier than previously anticipated given the rise in inflation and the robustness of the US economic data continue to be a key factor for the dollar. Comments from various members of the FOMC will be heard on Wednesday. The market is also awaiting President Joe Biden’s announcement of the Fed’s presidency, whether he will reappoint Powell or decide on a change.

Retracement without compromising trend

The USD / JPY decline has found support for the time being above 114.20 / 40, which was the previous resistance level, which was key to enabling further rallies. If it continues above this zone, the expectation of additional gains will have an important argument in favor.

The 115.00 zone is now the resistance to break by the dollar. The break would point to more gains in the short term; with next strong resistance at 115.50.

Technical levels

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