The USD/JPY remained weak at the intraday trough, extending the previous day’s declines. The BOJ Summary of Opinions outlines Omicron’s concerns about the state of the Japanese economy.
Second-tier data from Japan and the United States may be used to entice speculators ahead of the Fed’s decision.
An Examination Of The Technical Aspects
USD/JPY CHART Source: Tradingview.com
In the first part of the European period, the USD/JPY pair regained its footing above the 114.00 level and was last seen moving around a two-day high.
According to market analysts, it took a mix of supportive factors for the USD/JPY to draw some dip-buying in the 113.65 range on Tuesday and turn favorable for the second day in a row.
An Overview Of The Fundamentals
If the 113.40 level is violated, the USD/JPY might fall back to the 113.00 area, according to UOB Group’s FX Strategists.
Their perspective from the previous Friday (21 January, location 113.90) is still valid. As previously said, while short-term negative momentum has improved, the USD must break through the 113.40 level before a slide to 113.00 is considered plausible.
The likelihood of the USD breaking through 113.40 is low, but it will stay unchanged as long as the USD does not go beyond 114.45 (there is no change in the “strong resistance level”).
Yesterday, the USD traded between 113.65 and 114.14, which was a fractionally tighter range than the 113.65/114.20 range that had been forecast. Despite the relatively low volume of activity, the underlying tone looks to have softened a little bit.
However, while the USD might go below 113.60, the main support level of 113.40 is unlikely to be challenged. Resistance is located at 113.95, with 114.15 as the next resistance level.
It is believed that the Federal Reserve will tighten its monetary policy at a quicker rate than previously anticipated, which has continued to strengthen the US Dollar.
The markets appear to be confident that the Fed will eventually raise interest rates in March and have priced in a total of four rate rises in 2022.
Bulls also took cues from a positive comeback in the rates on US Treasury bonds, which was regarded as another factor supporting the Dand providing some stability to the USD/JPY exchange rate.
Conversely, the recent rally in the Japanese Yen, which has occurred over the past hour or so, may be linked to a generally bullish tone in the European equity markets, which continues to weigh on the safe-haven currency.
To plan for any additional intraday appreciating rise, bulls must first see some follow-through purchasing over the 200-hour simple moving average (SMA).
For now, market players are looking forward to the publication of The Conference Board’s US Consumer Sentiment Index, which they hope will provide some momentum during the early North American trading session.
The dollar will be influenced by this, as well as by the rates on US Treasury bonds. Aside from that, the overall risk attitude in the market should support the USD/JPY cross.
