Significant Sales Occasioned by Pressure

There has been a recovery of average intraday losses for the USD/JPY currency pair as it managed to make its way safely back to a daily high point of scale in the vicinity of the 123.75 to 123.80 zones in the early course of the European session.

After the pair struggled hard to get a level of acceptance over the 124.00 assigned mark, it then saw significant sales during Thursday’s trading, and the pressure for those sales was occasioned by a number of factors. The overwhelming cautious mood in the market was effective in directing a lot of funds to the Japanese yen as a safe-haven asset, and it put some pressure downward on the price of the spot while it seemed like a dovish tone was beginning to develop around the US dollar.

USD/JPY price chart. Source TradingView

The US treasury bond yield that is scaling back gave some direction to bearish traders of the pair, and that move put a lid on the latest rally of the US dollar to almost a high of two years.

That said, the USD/JPY currency pair’s ability to draw some investors who bought the dip close to the 123.45 zones was occasioned by a number of factors that gave support to it. A board member of the Bank of Japan, Asahi Noguchi, stated that the apex bank needs to keep going with the path of the easy monetary policy it is on, even though the increasing price of commodities is going to accelerate inflation rates.

FOMC Meeting Minute

On the flip side, the 15th to 15th of March Federal Open Market Committee meeting minute that was published on Wednesday revealed that Federal policymakers were ready to increase interest rates by 50 basis points during the next policy meeting of the Federal Reserve.

The content of the meeting equally revealed a broad-based agreement towards a reduction of the balance sheet of the central bank to a maximum of $95 billion monthly so it could tighten financial situations. The divergent policies of the US Federal Reserve and the Bank of Japan are expected to give some support to the possibility of a short-term appreciative movement of the USD/JPY currency pair.

From a technical point of view, the latest increase seen in a week has been in the trajectory of ascension, and it gives more indication of a firmly grounded uptrend for the short-term. If strength is sustained over the 124.00 figure, it would confirm the outlook of construction and let the USD/JPY pair consolidate on its gains of four consecutive trading sessions.