- USDJPY rises for the fourth day in a row and hits a one-week high on Monday.
- Some USD continuation buying continues to offer support for the pair amid the monetary policy divergence between the Fed and the BoJ.
- A sustained move above the 141.00 level is needed to support prospects for further gains.
The pair USDJPY gains some positive traction for the fourth day in a row on Monday and rises to a one-week high at the start of the European session. The pair is currently just below the 141.00 levelwith the bulls looking for a sustained move above the 100-day SMA.
The US dollar recovers from the lowest level since August 12, touched by softer US consumer inflation numbers last week, and acts as a tailwind for the USDJPY. Better-than-expected US retail sales data released on Thursday casts doubt on the narrative of a spike in inflation. Also, hawkish signals from several Fed officials suggest the US central bank is still some way from stopping its tightening cycle. This is seen as a key factor that continues to provide some support for the dollar.
Instead, Japanese yen hurt by more dovish stance taken by Bank of Japan (Boxwood). Indeed, BoJ Governor Haruhiko Kuroda reiterated on Friday that the central bank will maintain its monetary easing to support the economy and reach the inflation target of 2% in a sustained and stable manner. This is considered another factor driving the USDJPY pair higher. Having said that, softer risk tone helps limit deeper losses for safe-haven JPY and could cap any significant rise for the pair, at least for now.
Market sentiment remains fragile amid concerns about economic headwinds stemming from the worsening of the COVID-19 situation in China and the imposition of new closures in several financial centers. In addition, the fear of a possible escalation of the conflict between Russia and Ukraine dampens investor appetite for riskier assets. Even from a technical standpoint, the recent and repeated failures near the 141.00 level warrant some caution on the part of aggressive bulls before positioning for any further near-term bullish moves for USDJPY.
USDJPY technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
