• USD/JPY has failed to benefit from resurgent USD demand.
• Nervousness continues to underpin JPY’s safe-haven appeal.
The USD/JPY pair held on to its modest daily gains but remained below the 107.00 handle through the early European session on Thursday.
The US Dollar continues to be underpinned by the hawkish-sounding comments from the new Fed Chair Jerome Powell. The pair, however, has failed to benefit from resurgent USD demand and was being capped by recent nervousness in global equity markets.
Growing bets that the Fed could raise interest rates faster than previously anticipated has been denting investors’ appetite for riskier assets – like equities and boosting the Japanese Yen’s safe-haven demand.
Against the backdrop of diverging forces, the pair lacked any firm directional bias and has been oscillating within a broader range over the past few trading session. Hence, it would be prudent to wait for a decisive move in either direction before determining the pair’s near-term trajectory.
Traders now look forward to a flurry of US economic data and Powell’s second appearance before the Senate, which might provide the required momentum to break through the trading range.
Technical levels to watch
Momentum beyond the 107.00 handle might continue to confront resistance near the 107.30 area, above which the pair seems to make a fresh attempt towards clearing 107.65-75 heavy supply zone before darting towards the 108.00 round figure mark.
On the flip side, sustained weakness below mid-106.00s is likely to accelerate the fall towards 106.10-106.00 important support, which if broken might turn the pair vulnerable to head back towards retesting 105.55 level, multi-month lows set in Feb.
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