- A strong pickup in the USD demand extended some support to the USD/JPY on Thursday.
- A sharp pullback in the equity markets benefitted the safe-haven JPY and capped gains.
- The US PPI print and initial jobless claims data failed to provide any meaningful impetus.
The USD/JPY pair reversed an early dip to fresh one-month lows and was last seen trading in the neutral territory, just above the 107.00 mark.
A strong pickup in the US dollar demand assisted the USD/JPY pair to find some support near the 106.80 region amid extremely oversold conditions on short-term charts. The pair, for now, seems to have stalled its sharp retracement slide witnessed since the beginning of this week.
The Fed on Wednesday was pretty downbeat in its assessment of the US economy. The gloomy outlook provided a strong lift to the greenback status as the global reserve currency and turned out to be one of the key factors lending some support to the USD/JPY pair.
The US central bank also reiterated its commitment to maintaining extraordinary easy policy measures for some time. This, in turn, led to some strong follow-through slide in the US Treasury bond yields and kept a lid on any strong gains for the USD/JPY pair.
This coupled with a turnaround in the global risk sentiment continued benefitting the Japanese yen’s relative safe-haven status against its American counterpart. The strong bid tone surrounding the JPY further collaborated towards capping the USD/JPY pair.
Meanwhile, Thursday’s slightly better than expected Producer Price Index and mostly in line Initial Weekly Jobless Claims data from the US did little to influence traders or provide any meaningful impetus to the major.
Hence, it will be prudent to wait for some strong follow-through buying before confirming that the pair might have bottomed out in the near-term and positioning for any meaningful recovery.
Technical levels to watch