Title: USD/JPY Rebounds from Session Lows, Trades Around 147.61 Amid Market Caution
Source: FXDailyReport | Original Author: Richard Pace
Original Article: [FXDailyReport – USD/JPY Bounces Off Session Lows](https://fxdailyreport.com/usd-jpy-bounces-off-session-lows-to-trade-at-about-147-61/)
The US dollar strengthened against the Japanese yen during the latest trading session, pulling away from its earlier session lows and settling near 147.61. This recovery comes amid a backdrop of mixed investor sentiment, moderate risk aversion, and shifting expectations surrounding economic policy from key global central banks. The USD/JPY pair’s resurgence reflects broader developments in the financial markets, including bond yields, economic indicators, and geopolitical concerns influencing both the dollar and yen.
Overview of Recent Price Action
– The USD/JPY pair started the session under pressure, dipping due to weakness in the greenback and heightened demand for safe-haven assets like the yen.
– After touching intra-day lows, the currency pair rebounded steadily, climbing back toward the 147.61 level by mid-session.
– The recovery is viewed as a technical correction and a reaction to fresh developments on US Treasury yields and economic sentiment.
Factors Driving USD/JPY Movement
Several fundamental factors have contributed to the movements in the USD/JPY currency pair. Traders are closely monitoring the following variables:
1. US Economic Data
– Recent data from the US, including jobless claims and inflation metrics, have provided a mixed view of economic momentum.
– Strong employment data earlier this month had initially strengthened the dollar on expectations the Federal Reserve might keep interest rates elevated for longer.
– However, subsequent reports highlighting slower consumer spending and subdued inflation have dampened hawkish expectations.
2. Federal Reserve Policy Outlook
– Market participants have been adjusting their outlook for the Fed’s monetary policy path. While earlier consensus pointed toward sustained high rates through early 2024, dovish commentary from Fed officials has led to speculation of softer policy ahead.
– The US central bank, in its latest meeting, opted to hold interest rates steady, while signaling that future hikes, if any, would be data-dependent.
3. Japanese Monetary Policy Dynamics
– The Bank of Japan (BoJ), under Governor Kazuo Ueda, remains committed to an ultra-loose monetary policy stance.
– Despite signs of modest inflation in Japan, the BoJ has not indicated immediate plans to raise interest rates, making the yen less attractive in the face of higher global yields.
– Any speculation that the BoJ may revise its stance in the coming months could strengthen the yen, but for now, its dovish position favors USD/JPY upside.
4. US Treasury Yields
– The movement in US Treasury yields has had a substantial impact on dollar performance.
– Yields on 10-year US Treasury notes rose during the session, attracting buying interest in the dollar.
– Rising yields indicate market expectations of prolonged higher interest rates in the US, serving as a tailwind for USD/JPY.
5. Risk Sentiment and Safe-Haven Demand
– Global risk appetite has been relatively unstable due to geopolitical tensions and perceptions of slowing growth in major economies.
– When market sentiment sours, investors tend to move capital into safe-haven assets such as the Japanese yen.
– This dynamic initially pressured the USD/JPY pair lower, but the rebound in risk assets later in the session reversed some of that demand for yen.
Technical Analysis of USD/JPY
From a technical standpoint, the USD/JPY currency pair appears to be in a consolidation phase after a prolonged uptrend, which started earlier in the year. The following chart elements are of interest to traders and analysts:
– Support Levels:
– Near-term support lies around 146.50, a level previously tested during the day’s session.
– A more significant support zone is expected near 145.00, where buying interest may intens
Explore this further here: USD/JPY trading.