USDJPY gathers momentum once more and recoups some of the overnight losses.
Near the 138.75 level, a new weekly low made during Friday’s Asian session. The USDJPY pair draws some dip buyers and somewhat recoups the previous day’s severe losses. The pair is now trading in the 139.30 level and has increased by almost 0.30% today.
The demand for the USD is revived and given some support by a slight increase in US bond yields.
Following an overnight decline to a two-week low. A slight increase in US Treasury bond yields helps the US Dollar (USD) regain some upward momentum. This is then perceived as working as for the USDJPY pair. A favorable wind. The Bank of Japan (BoJ)’s more dovish posture. On the other hand, continues to erode the Japanese Yen (JPY). While statements from Governor Ueda Kazuo seem to have no impact. Ueda stated in his address to the legislature. That the BoJ is carrying out programs to attain steady inflation of 2%.
Before the risks of the central bank event next week, the Fed’s rate hike uncertainty will constrain gains.
While investors continue to be sceptical about the Federal Reserve’s (Fed) strategy for raising interest rates. The upside for the USD appears to be limited.
In fact, the market appears to be certain that the US central bank will stop raising rates in June after a year-long cycle, and the expectations were confirmed by Thursday’s dismal US data, which showed that initial claims for unemployment insurance rose to a 20-month high last week.
Nevertheless, the Fed funds futures show the potential for a third 25 bps Fed rate increase in July. As a result, next week’s attention will be fixed on the biggest central bank event risks.
The BoJ meeting will take place on Thursday after the Fed releases its monetary policy decision at the conclusion of a two-day meeting on Wednesday. This will in turn have a significant impact on the USDJPY pair and aid traders in identifying the following leg of a directional move.
Meanwhile, concerns about a downturn in the world economy, particularly in China, may favor the safe-haven JPY and limit the pair’s upside potential. In the future, in the lack of any pertinent data, the US bond yields will drive the demand for the USD. Friday’s macro data, together with the overall risk attitude, may help provide short-term opportunities around the major.
