- A combination of factors does not help USD / JPY capitalize on its modest rally.
- Diminishing the odds of an earlier Fed rate hike keeps USD bulls on the defensive.
- A softer risk tone benefits the safe-haven JPY and helps limit the pair’s rally.
The pair USD/JPY has struggled to capitalize on its modest intraday rally and is backing down just below the 111.00 level during the European session on Monday.
The pair has halted the post-NFP retracement decline of the previous day from 15-month highs and it has moved to during the first half of trading action on Monday. The rally, however, has lacked a strong following and it has held tight amid subdued action around the price of the US dollar.
The details of the report on employment in the United States calmed fears of a previous Fed rate hike and they acted as a headwind for the USD. The main figure from the NFP showed that the US economy added 850,000 jobs in June, although the strong pace was offset by a unexpected increase in unemployment rate.
On the other hand, a softer risk tone has offered some support to the safe-haven Japanese yen and has collaborated in limiting the USD / JPY pair. Investors also appear reluctant to open aggressive positions amid tight liquidity conditions due to the US holiday.
Looking to the future, the focus is now on the release of the minutes of the FOMC meeting, which will be examined for clues about the central bank’s monetary policy outlook. This will play a key role in the USD price action in the short term and will provide further momentum to the USD / JP pair.
Meanwhile, broader market risk sentiment will continue to influence USD / JPY and allow investors to seize some short-term opportunities. That said, momentum is likely to be limited as investors might prefer to wait on the sidelines before the key event.
USD / JPY technical levels
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