New Buying and Rallies
The USD/JPY currency pair has had another rally in the area of 60 to 65 pips in the course of the early European session. It eventually shot back close to the high end of the daily range in the vicinity of mid-129.00 about an hour before this report.
The USD/JPY pair drew some buying from its dip close to the 128.70 area on Monday and it became positive for the second consecutive day. Bullish traders are now looking for a way to build on the goodish recovery from the mid-127 area from last week.
USD/JPY price chart. Source TradingView
Indications of a little stability that attended the financial market undermined the safe-haven status of the Japanese Yen and became a tailwind for the pair of the USD and JPY. That said, the coming together of a number of factors stopped bullish traders from staking aggressive bets and it capped the prices of spots.
COVID Crisis and Ukraine
It now looks like investors are concerned about the slow pace of the global economy at this time when there are huge possibilities of aggressive policy implementation from central banks. The zero COVID policy in China as well as the ongoing war in Ukraine also add to the list of concerns investors are dealing with at this time.
The concerns have now been further heightened by very weak macro data that came in from China.
All these in collaboration with political tensions, prolonged support given to conservative safe-haven commodities like the US Dollar. In turn, this led to the retreating of the benchmark ten-year yield from its latest peak of 3.20%, which put the US Dollar bullish traders on a defensive path. It also put a lid on further gains around the USD/JPY currency pair.
However, the basic background gives support to the possibilities of the resumption of the latest appreciation with the huge divergence between the Bank of Japan and the US Federal Reserve. Market players are now looking forward to the Purchasing Managers Index from the US Empire for new momentum in the course of the North American session.
This expectation, as well as the bond yields of the United States and the general risk sentiment, are in the right position to let traders get some near-term trading chances in the vicinity of the USD/JPY currency pair.