USD/JPY bounces off multi-week low, finds decent support ahead of 145.00 mark
- USD/JPY continues losing ground for the third straight day and drops to a multi-week low.
- The recent suspected intervention by the BoJ underpins the JPY and exerts some pressure.
- An uptick in the US bond yields revives the USD demand and helps limit any further losses.
- Traders now eye US macro releases for a fresh impetus ahead of the BoJ meeting on Friday.
The USD/JPY pair remains under some selling pressure for the third successive day and drops to a nearly three-week low on Thursday. Spot prices, however, bounce back to the 146.00 neighbourhood during the first half of the European session, though the attempted recovery lacked follow-through.
The Japanese yen continues to draw support from the suspected intervention by the Bank of Japan (BoJ) last Friday and earlier this week. Apart from this, speculations of a policy tweak by the BoJ exert some downward pressure on the USD/JPY pair. That said, a combination of factors limits the downside and assists the major to attract some buyers near the 145.00 psychological mark.
A positive risk tone undermines the safe-haven JPY. Apart from this, a modest US dollar recovery from over a one-month low, buoyed by an uptick in the US Treasury bond yields, offers some support to the USD/JPY pair. Meanwhile, expectations that a slowdown in the US economy will force the Fed to soften its hawkish stance might hold back the USD bulls from placing aggressive bets.
Investors also seem reluctant and prefer to move to the sidelines ahead of the release of the Advance US Q3 GDP report, due later during the early North American session. Thursday's US economic docket also features Durable Goods Orders and the usual Weekly Initial Jobless Claims. The data might provide some impetus to the USD/JPY pair, though the focus remains on the BoJ meeting on Friday.
The Japanese central bank is widely expected to keep its loose policy settings unchanged. This marks a big divergence in comparison to a more hawkish stance adopted by major central banks, which should cap the JPY. This, in turn, supports prospects for the emergence of some dip-buying around the USD/JPY pair. That said, weakness below the 145.00 mark should pave the way for further losses.
Technical levels to watch