The USDJPY trades at 144.60 in early Tuesday AM Europe, indicating the market’s cautious tone. Amid the US Independence Day holiday and conflicting emotions.
It’s worth mentioning that the Yen pair’s recent weak performance might be attributed to concerns over Japan’s market intervention to preserve the local currency, which is hovering at its highest levels in eight months. Fears of a recession have also posed a challenge to USDJPY purchasers. via the inversion of US Treasury bond rates.
Japan’s officials have shown a willingness to interfere in money markets to preserve the USDJPY.
Japanese Finance Minister Shunichi Suzuki recently stated on Tuesday. That he is “keeping in close contact with the US at the vice-ministerial level on FX.” Earlier in the day, the country’s senior currency ambassador, Masato Kanda, told Reuters that he is engaging with several countries, including the United States, about currencies.
In other news, the inversion between US 10-year and two-year Treasury bond rates has reached a new level since 1981. Raising fears of a new recession. “The yield curve briefly inverted to 42-year lows Monday as investors increasingly expect the Fed to raise its benchmark borrowing rates to keep inflation in check.” Reuters said after US two-year Treasury bond yields plummeted to 4.85%. And 10-year Treasury bond yields dipped to 3.78%. Both of these benchmark rates closed Monday’s trading at roughly 4.93% and 3.86%, respectively.
Downbeat US statistics, on the other hand, push US Dollar supporters. But sour mood permits the greenback to crawl higher amid holiday swings. On Monday, the US ISM Manufacturing PMI for June fell to the lowest level in three years. And remained below the 50.0 barrier for the seventh consecutive month. As it registered 46.0 vs 47.2 predicted and 46.9 before. Furthermore, the S&P Global Manufacturing PMI for June reaffirmed 46.3. The lowest in five months, while Construction Spending increased 0.9% MoM for May, versus 0.5% predicted and 0.4% in prior readouts.
Against this context, S&P500 futures are declining, despite Wall Street seeing slight gains. Moving on, the US vacation will limit immediate USDJPY swings, but market intervention worries may keep the bullish tilt in check, despite aggressive Fed wagers favoring a 0.25% rate rise in July.
Technical Analysis
As the lower-high formation around the multi-day top joins the overbought RSI, as well as a downside breach of a three-week-old rising support line, now immediate resistance at 144.70, USDJPY bulls are running out of steam.
