- USD/JPY started May on the right foot, rising 0.21%.
- The market mood is one of risk aversion courtesy of the FOMC meeting and the spread of Covid-19 in China.
- USD/JPY Price Forecast: Range bound, contained to the upside, following last week’s language intervention by Japan’s Finance Minister.
The USD/JPY remained comfortable above 130.00 on Monday as US Treasury yields rose the day before the Fed’s monetary policy meeting, led by 10-year yields trading at 3%. At the time of writing, USD/JPY is trading at 130.11, up a further 0.20%.
Market sentiment is affected by the FOMC meeting and the spread of Covid-19 in China
A risk aversion environment hit the trading session on Monday. Sentiment is gloomy ahead of the Federal Reserve meeting as China struggles to control the spread of Covid-19, with Shanghai reporting 58 new cases as restrictions threaten to be imposed once again, while Beijing continues to push for it to be lifted. run more tests. On the Ukrainian-Russian front, things remain impassive, talks are going nowhere, while hostilities intensify, as news agencies reported that Russia is “laying the groundwork” to take control of Moldova, according to the Times.
Meanwhile, earlier in the North American session, the ISM Manufacturing PMI for April grew at a slower pace to 55.4 and disappointed expectations of 57.6 while falling short of March’s reading of 57.1. Commenting on the report, ISM Manufacturing Business Survey Committee Chairman Timothy Fiore said the new overseas coronavirus outbreaks were “creating a short-term headwind for the US manufacturing community in the United States.” summer months.”
The positive note of the report was that the Prices Paid index fell from 87.1 to 84.6, a sign that could probably mean that inflation could be peaking.
Meanwhile, US bond yields remain elevated ahead of the Federal Reserve’s monetary policy meeting in May. The 10-year US Treasury bond is trading at 2.99%, hovering around the 3% threshold, supporting the dollar, with the US Dollar Index gaining 0.28% to 103.502.
On the Japanese front, consumer confidence rose in April to 33, from a forecast of 31.7 and higher than March’s 32.8. “Consumer sentiment turned positive as COVID-19 cases fell further and the lifting of restrictions paved the way for the reopening of the economy,” according to sources quoted by Reuters.
USD/JPY Price Forecast: Technical Outlook
The USD/JPY daily chart shows that the pair remains confined to the 130.00 area as market players await the Federal Reserve. Both the MACD lines and the signal are trendless, which means that the main one is inside the range, waiting for a new catalyst.
Meanwhile, the 1 hour chart shows USD/JPY hovering around the daily pivot point around 130.05, while the MACD on this time frame shows the pair range bound.
To the upside, the first resistance for USD/JPY would be at 130.50. Breaking above would expose the R1 daily pivot around 130.80, followed by 131.00. On the other hand, the first support for USD/JPY would be the daily pivot around 130.05. A break of the latter would expose the 100 hourly simple moving average (SMA) at 129.39, followed by the daily S1 pivot near 129.10-14.
Technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
