USD/JPY steadily climbs back above 137.00 mark amid renewed USD buying interest


  • USD/JPY regains positive traction on Friday and is supported by a combination of factors.
  • Hawkish Fed expectations help revive the USD demand and offer support to the major.
  • The Fed-BoJ policy divergence and a positive risk tone undermine the safe-haven JPY.
  • Traders now eye the US PCE data for some impetus ahead of Fed Chair Powell’s speech.

The USD/JPY pair attracts fresh buying on Friday and climbs back to the 137.00 mark during the early European session, reversing the previous day's losses.

The US dollar builds on the overnight bounce from the weekly low and gains some traction on the last day of the week, which, in turn, is seen lending some support to the USD/JPY pair. Firming expectations that the Fed will tighten its policy further to tame inflation continues to underpin the buck. The bets were reaffirmed by upbeat US macro data and hawkish remarks by Fed officials on Thursday.

In fact, St. Louis Fed chief James Bullard stressed the need to keep raising interest rates. Adding to this, Kansas City Fed President Esther George said the Fed hasn’t yet raised rates to levels that weigh on the economy and may have to take them above 4% for a time. Policymakers, however, reserved their judgment on the size of the rate increase at the next FOMC policy meeting in September.

Nevertheless, the markets are still pricing in a greater chance of a supersized 75 bps rate hike. In contrast, the Bank of Japan is expected to retain its ultra-easy policy stance, marking a big divergence in comparison to a more hawkish Fed. This, along with a generally positive tone around the equity markets, undermines the safe-haven Japanese yen and contributes to the USD/JPY pair's move up.

The fundamental backdrop supports prospects for a further near-term appreciating move. That said, bulls might refrain from placing aggressive bets and prefer to wait for a more hawkish message from Fed Chair Jerome Powell at the Jackson Hole Symposium. Ahead of the key event risk, traders might take cues from the release of the US PCE data, due later during the early North American session.

Technical levels to watch

USD/JPY

Overview
Today last price 137.03
Today Daily Change 0.54
Today Daily Change % 0.40
Today daily open 136.49
 
Trends
Daily SMA20 134.64
Daily SMA50 135.72
Daily SMA100 132.51
Daily SMA200 124.25
 
Levels
Previous Daily High 137.2
Previous Daily Low 136.32
Previous Weekly High 137.23
Previous Weekly Low 132.56
Previous Monthly High 139.39
Previous Monthly Low 132.5
Daily Fibonacci 38.2% 136.66
Daily Fibonacci 61.8% 136.86
Daily Pivot Point S1 136.14
Daily Pivot Point S2 135.79
Daily Pivot Point S3 135.26
Daily Pivot Point R1 137.02
Daily Pivot Point R2 137.55
Daily Pivot Point R3 137.9

 

 

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