- A combination of factors helped the USD / JPY make a modest bounce from the multi-week lows.
- A rally in US bond yields helped reignite demand for USD and continued to act as supportive.
- A weaker tone around equity markets benefited the safe-haven JPY and limited the upside.
The pair USD/JPY He maintained his offered tone during the early American session, although he seemed to have a difficult time capitalizing on the move beyond 108.50.
The pair showed some resistance below 108.00 and gained some positive traction on Tuesday to recoup some of the previous day’s losses. An intraday rally in US Treasury yields triggered the initial leg of the positive move, which got additional boost from a modest rally in the US dollar from multi-week lows.
However, a turnaround in global risk sentiment, as shown by a weaker open in US equity markets, extended some support to the Japanese yen – safe haven. This, in turn, prevented bull traders from making aggressive bets and kept any significant rallies for the USD / JPY limited, at least for the time being.
Meanwhile, the inability of the USD / JPY pair to capitalize on the recovery movement suggests that the recent drop from the vicinity of 111.00, or the one-year highs, could be far from over. This makes it prudent to wait for some solid follow-up buying before confirming that the pair has formed a solid footing in the short term.
In the absence of significant economic data to move the US market, broader market risk sentiment will drive demand for the JPY as a safe haven and provide some boost to the USD / JPY pair. Traders could follow the signs of US bond yields, which could influence USD price dynamics and generate some short-term opportunities.
Technical levels
.
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.
