- USD/JPY oscillated in a range through the early part of the trading action on Wednesday.
- COVID-19 jitters benefitted the safe-haven JPY and acted as a headwind for the major.
- An uptick in the US bond yields offset a modest USD weakness and extended support.
The USD/JPY pair lacked any firm directional bias and seesawed between tepid gains/minor losses, just above mid-109.00s through the early European session.
A combination of factors failed to assist the USD/JPY pair to capitalize on the overnight bounce from the vicinity of the 109.00 mark and led to a subdued/range-bound price action on Wednesday. A softer tone around the equity markets underpinned the safe-haven Japanese yen. This, along with a modest US dollar weakness, acted as a headwind for the major.
Investors remain worried that the fast-spreading Delta variant of coronavirus could lead to a global economic slowdown. This, along with political tensions in Afghanistan, weighed on investors' sentiment and benefitted traditional safe-haven assets. That said, an extension of the stage of emergency in Tokyo and seven more prefectures capped gains for the JPY.
On the other hand, diminishing odds for an early policy tightening by the Fed kept the USD bulls on the defensive and held traders from placing fresh bullish bets around the USD/JPY pair. However, an uptick in the US Treasury bond yields continued lending some support to the greenback and helped limit any meaningful slide for the USD/JPY pair, at least for now.
Investors also seemed reluctant and preferred to wait on the sidelines ahead of the release of the FOMC meeting minutes. Market participants will look for clues about the likely timing on when the Fed will begin tapering its assets purchases. This should play a key role in influencing the USD price dynamics and provide a fresh directional impetus to the USD/JPY Pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD holds gains near 0.6250 but upside appears limited
AUD/USD remains on the front-foot near 0.6250 following the previous day's good two-way price swings amid confusion over Trump's tariff plans. The Aussie, meanwhile, remain close to over a two-year low touched last week in the wake of the RBA's dovish shift, China's economic woes and US-China trade war fears.
USD/JPY: Bulls retain control above 158.00, Japanese intervention risks loom
USD/JPY is off multi-month top but stays firm above 158.00 in the Asian session on Tuesday. Doubts over the timing when the BoJ will hike rates again and a broad-based US Dollar rebound, following Monday's Trump tariffs speculation-led sell-off, keep the pair supported ahead of US jobs data.
Gold price struggles to lure buyers amid hawkish Fed, elevated bond yields
Gold price trades with a negative bias for the third straight day on Tuesday, though it lacks follow-through amid uncertainty over Trump's tariff plans. Moreover, the recent USD pullback from over a two-year high and geopolitical risks support the safe-haven XAU/USD.
Ripple's XRP eyes rally to new all-time high after 40% spike in open interest
Ripple's XRP trades near $2.40, up 1% on Monday following a 40% surge in its futures open interest. The surge could help the remittance-based token overcome the key resistance of a bullish pennant pattern.
Five fundamentals for the week: Nonfarm Payrolls to keep traders on edge in first full week of 2025 Premium
Did the US economy enjoy a strong finish to 2024? That is the question in the first full week of trading in 2025. The all-important NFP stand out, but a look at the Federal Reserve and the Chinese economy is also of interest.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.