USD/JPY rebounds from 115.55, still challenging key resistance
- US dollar falls across the board amid risk appetite.
- De-escalation in Ukraine, and hopes for more talks triggers reversal.
- USD/JPY slides despite higher US yields.
The USD/JPY dropped during the American session to 115.54, hitting a fresh daily low and quickly rebounded back toward the 115.80 area. The improvement in market sentiment weighs on the US dollar and the yen.
The greenback, measured by the DXY, is falling for the second day in a row, pulling back from multi-year highs. It bottomed near 98.00 after reaching levels close to 99.50 on Monday. The slide in USD/JPY was triggered by the weaker dollar but at the same time, higher US yields limited losses. The US 10-year yield hit weekly highs at 1.92% and the 30-year is around 2.25%.
Range prevails despite volatility
Volatility has been the rule across financial markets over the last few days. Price action across FX pairs includes sharp declines and rebounds, but USD/JPY remains relatively quiet, making average moves every day.
If USD/JPY finally confirms a break above 115.80 then some directional move could be on the cards, including the possibility of rising above 116.00 and more. If the pair fails, and remains in the range, then a slide back to the 114.70 area over the next days seems likely.
With US inflation data due tomorrow, and the FOMC meeting next week, and also considering that currently the upper limit of the range is begin tested, the odds of a clearer move are on the rise.
Technical levels