USD/JPY Shows Strong Bearish Impulse after Pullback 140.400

٦ يونيو ٢٠٢٣

In terms of technical analysis, yesterday the USD/JPY experienced a strong bearish impulse after reaching the 140.400 value. This indicates a downward price change and suggests a bearish setup.

On the fundamental side, the US Dollar (USD) has been recovering from a one-week low since the release of the Non-Farm Payrolls (NFP) data. This recovery is seen as a positive factor for the USD/JPY pair and is supported by the expectation of a 25 bps rate hike by the Federal Reserve (Fed) at its upcoming policy meeting. The rise in US Treasury bond yields due to this expectation continues to strengthen the US Dollar.

On the other hand, the Japanese Yen (JPY) is being negatively affected by the Bank of Japan's (BoJ) more dovish stance. Additionally, the JPY's safe-haven status is being diminished by the prevailing risk-on sentiment in the equity markets, further supporting the USD/JPY pair. However, the possibility of Japanese authorities intervening in the markets limits deeper losses for the JPY and prevents significant gains for the USD/JPY pair, at least for now.

Considering these factors, it is advisable for aggressive bullish traders to exercise caution and carefully evaluate before taking any further intraday bullish positions. Nonetheless, the overall fundamental backdrop suggests that the path of least resistance for the USD/JPY pair is upward.

Traders are now keeping an eye on the US ISM Services PMI, scheduled for release later during the early North American session. Additionally, the movement of US bond yields, along with the broader risk sentiment, is expected to provide fresh momentum to the major currency pair.