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USD/JPY still under pressure below 115.00, risk appetite helps limit losses

  • Renewed USD weakness prompts some selling around USD/JPY on Monday.
  • Risk appetite weighs on the safe-haven JPY and helps limit losses.
  • Mixed fundamentals warrant some caution before opening new directional positions.

The pair USD/JPY remains under pressure at the start of the European session on Monday, hovering near the lower end of its daily range just below the 115.00 level.

The US dollar was met with fresh selling on Monday, which put some downward pressure on the USD/JPY pair, although risk-on sentiment weighed on the safe-haven Japanese yen and helped limit further losses. The January FOMC meeting minutes failed to bolster market expectations for a 50 basis point rate hike in March. Additionally, expectations that geopolitical developments could force the Fed to adopt a less aggressive stance to combat high inflation weighed on the USD and the pair.

However, the fall is still supported, at least for the moment, amid new hopes for a diplomatic solution to the ongoing standoff over Ukraine. French President Emmanuel Macron’s office announced Monday that the US president, Joe Biden and his Russian counterpart, Vladimir Putin, have agreed in principle to hold a summit on the Ukraine crisis. This, in turn, raised global risk sentiment and turned investors away from traditional safe-haven assets such as the JPY.

The combination of diverging factors prevented investors from opening aggressive directional positions ahead of the next meeting between US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov scheduled for February 24. There are no economic data releases for the Presidents Day holiday in the United States. Therefore, it will be wise to wait for some continuation selling before positioning for any further bearish moves in the USD/JPY pair.

USD/JPY technical levels

Source: Fx Street

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