USD/JPY drops on risk-aversion spurred on Middle-East tensions, falling US bond yields


  • USD/JPY drops 0.36% amidst escalating Israel-Palestine conflict, bolstering the Yen’s safe-haven status.
  • Dallas Fed President Lorie Logan emphasizes restrictive monetary policy, spotlighting inflation as a primary concern.
  • Upcoming economic data from Japan and the US, including Current Account and inflation figures, to influence the pair’s trajectory.

The Japanese yen (JPY) appeals to its status as a safe haven and appreciates against the Greenback (USD) in the mid-North American session as tensions between Israel and Palestine grow. Fighting during the weekend increased after Hamas claimed an attack on Israel during the Yom Kippur festival. At the time of writing, the USD/JPY is trading at 148.70, down 0.36%.

Safe-haven appeal of JPY intensifies amidst geopolitical strife

Global equities are set to remain pressured as Middle East tensions rise. Dallas Fed President Lorie Logan commented that monetary policy needs to remain restrictive, adding that higher US bond yields would diminish the need to increase interest rates and that her focus is bringing inflation down. Logan added that financial conditions are tightening but in an orderly fashion.

Although US Treasury bond yields remain high, they had dipped as of Monday. The US 10-year Treasury bond yield drops fourteen basis points and oscillates at 4.674%.

In the meantime, last week’s September US Nonfarm Payrolls report portrays the labor market remains hot and justifies the need for more rate hikes, but the CME Fed Watch Tool portrays investors who remain skeptical. In fact, traders expect the US Federal Reserve’s (Fed) first rate cut by May 2024, with odds standing at 51.97%.

USD/JPY are eyeing the current week's data. On the Japanese front, the economic agenda would feature the Current Account. In the US, the Fed parade continues, along with inflation figures on the producer and consumer side. After that, unemployment claims and consumer sentiment would update the status of the US economy.

USD/JPY Price Analysis Technical outlook

The USD/JPY remains neutral to upward bias, with price action remaining above the Ichimoku Cloud (Kumo). However, if the pair drops below the latest cycle high of 147.87 and achieves a daily close below the latter, the major could challenge the top of the Kumo at around 145.50. On the other hand and the path of least resistance, the USD/JPY could test the 150.00 figure, but first it needs to conquer 149.00

USD/JPY

Overview
Today last price 148.77
Today Daily Change -0.56
Today Daily Change % -0.38
Today daily open 149.33
 
Trends
Daily SMA20 148.42
Daily SMA50 146.53
Daily SMA100 143.74
Daily SMA200 138.44
 
Levels
Previous Daily High 149.54
Previous Daily Low 148.36
Previous Weekly High 150.16
Previous Weekly Low 147.32
Previous Monthly High 149.71
Previous Monthly Low 144.44
Daily Fibonacci 38.2% 149.09
Daily Fibonacci 61.8% 148.81
Daily Pivot Point S1 148.61
Daily Pivot Point S2 147.9
Daily Pivot Point S3 147.44
Daily Pivot Point R1 149.79
Daily Pivot Point R2 150.25
Daily Pivot Point R3 150.96

 

 

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