USDJPY see some dip buying, recovers a portion of losses

During the first half of the European session, the USDJPY pair recovers more than 50 pips from the daily low and steadily climbs back closer to the top end of its daily trading range. The pair is currently trading near 132.75, almost unchanged for the day and just below the one-week high set on Wednesday.

The pervasive risk-on atmosphere threatens the JPY’s status as a safe haven and supports the pair.

A continuation of the risk-on rally in global equity markets underpins the safe-haven Japanese Yen (JPY). Allowing the USDJPY pair to attract some dip-buying near 132.20. The global risk sentiment is being bolstered by dwindling fears of a full-fledged banking crisis. Particularly following the takeover of Silicon Valley Bank by First Citizens Bank & Trust Company.

In addition, no new cracks have appeared in the banking sector. over the last two weeks, which has increased investors’ appetite for riskier assets while driving flows away from traditional safe-haven currencies such as the JPY.

Bullish traders are being prevented from putting new bets around the major by a slight USD weakness.

Meanwhile, the USDJPY pair’s upside remains limited due to the emergence of some selling around the US Dollar (USD). Nonetheless, easing banking sector concerns have fueled new speculation that the Federal Reserve (Fed) will resume its inflation-fighting interest rate hikes. This was seen as a key factor in the recent strong rally in US Treasury bond yields, which is seen as a tailwind for the Greenback and supports prospects for the major to continue appreciating in the near term. Bulls, on the other hand, appear hesitant to place aggressive bets ahead of the crucial US The PCE report.

The Fed’s preferred inflation gauge, the US Core PCE Price Index, is set to be released on Friday. Along with expectations for future rate hikes. This, in turn, will drive USD demand and give the USDJPY pair a new directional impetus.

Meanwhile, traders will look to the release of the final US Q4 GDP print and the usual Weekly Initial Jobless Claims data on Thursday for some impetus later in the early North American session. Aside from that, the overall risk sentiment may produce short-term opportunities.

USDJPY Daily Trends