USD/JPY Hourly Chart
The high was reached earlier today around 147.20 and also tested the overnight high. The sellers held on and since then, the traffic has been one-way now as we enter European morning trading. The USD/JPY pair has returned to the downside to around 146.00, although the buyers are still largely in control as can be seen from the short-term chart above.
The pair has been more volatile than other major currencies over the past couple of months and it looks like things will continue to be that way.
The bond market doesn’t look like it’s on the mend, with yields down slightly on the day. Meanwhile, risk sentiment has turned more cautious, but not very defensive in the overall picture. S&P 500 futures are down just 0.1% currently.
In the FX market, the Australian and New Zealand dollars have fallen significantly, but I would argue that this is also due to some slight strength in the dollar coupled with a drop in iron ore prices during the day. The recovery in the USD/CNY from the December lows yesterday is another supportive factor.
Coming back to USD/JPY, the decline we have seen so far today doesn’t mean much. It erases yesterday’s gains, but it threatens to end the pair’s four-day winning streak. In fact, the pair seems to be largely consolidating at and around the 145.00 level after the massive decline we have seen since July.
That is until we get the next catalyst for a bigger push. So let’s see what this week’s US data has to offer in this regard.