On Thursday, the USDJPY pair faces some selling pressure and pulls away from its best level since mid-December. Which was around the 137.90 zone achieved the previous day. The pair continued its steady intraday decline during the first half of the European session. Dropping to a new daily low in the past hour, around the 136.20 level.
Fears of a recession favor the safe-haven JPY and weigh on the pair as the USD falls somewhat.
Fears over a deeper global economic slowdown continue to weigh on investors’ attitude. Favoring the safe-haven Japanese Yen (JPY) while pushing the USDJPY pair lower. Worries were exacerbated by lower Chinese inflation numbers reported earlier this week. Which revealed that domestic demand remains lackluster and shattered hopes for a significant comeback in the world’s second-largest economy. This, together with a modest The US Dollar’s retreat from a three-month high adds to the offered toe around the major. The USDJPY pair’s downside is more likely to be restricted. At least for the time being, as the Bank of Japan (BoJ) maintains its dovish stance to assist the country’s frail domestic economy.
The announcement of the final GDP print, which pointed to sustained economic contraction, confirmed the bets. Furthermore, new BoJ Governor Kazuo Ueda recently emphasized the need of maintaining ultra-loose policy settings. And stated that the central bank is not seeking a speedy exit from a decade of huge easing.
Fed-BoJ policy divergence benefits bulls and could help limit any significant decline.
In contrast, Fed Chair Jerome Powell stated on Wednesday that interest rates would have to rise. The US Dollar’s retreat from a three-month high adds to the offered toe around the major. The USDJPY pair’s downside is more likely to be restricted. At least for the time being, as the Bank of Japan (BoJ) maintains its dovish stance to assist the country’s frail domestic economy. The announcement of the final GDP print, which pointed to sustained economic contraction, confirmed the bets. Furthermore, new BoJ Governor Kazuo Ueda recently emphasized the need of maintaining ultra-loose policy settings. And stated that the central bank is not seeking a speedy exit from a decade of huge easing.
In contrast, Fed Chair Jerome Powell stated on Wednesday that interest rates would have to rise. Following that will be the US monthly employment report, also known as the NFP report. Which should assist investors in determining the next leg of a directional move for the USDJPY pair.
