According to Reuters, the USD/JPY reversed from its intraday high to test the previous two-day upswing, falling 0.03% on the day to around 113.70 during the first hour of Tokyo trade on Wednesday.
The recent decline in the risk barometer pair might be connected to the Omicron worries and the market’s nervousness ahead of today’s Federal Reserve (Fed) fiscal policy session in the United States.
An Assessment Of The Technical Aspects
USD/JPY CHART Source: Tradingview.com
The USD/JPY combination lacked any discernible directional bias throughout the early European session and was restricted to a narrow trading range slightly over the mid-113.00s.
Thus far, the duo has been unable to gain any significant impetus, and the subdued, range-bound price movement that has been in place for the better part of a week has been extended.
Price movement has recently been in a price bracket, forming a rectangle on short-term indicators as a result of this behavior.
This indicates a lack of confidence among investors, and it will be wise to hold off on positioning for the next leg of a trend reversal until a clear breach through the trading range has occurred.
An Overview Of The Fundamentals
Investors decided to remain on the sidelines and await the conclusion of this week’s two central bank meetings — the Federal Open Market Committee decision on Wednesday and the Bank of Japan decision on Friday — for a new trigger.
Meanwhile, a confluence of opposing factors failed to generate any significant momentum or aid the USD/JPY pair in capitalizing on the gains it had made during the previous two trading sessions.
Because of the overall upbeat tone in the financial markets, the conventional safe-haven Japanese Yen has suffered, while the USD/JPY pair has gained some support.
For its part, the US Dollar tried to benefit from the overnight rally to a one-week high but instead saw some intraday selling as a result of the overnight rally.
That, in turn, did not inspire confidence in bearish investors or give any more support for the USD/JPY pair. Nonetheless, hawkish Fed predictions, as well as an increase in the rates on US Treasury bonds, managed to keep any significant USD losses to a minimum.
Meanwhile, concerns about the possible economic impact of the expansion of the Omicron strain, as well as the installation of new limitations in Europe and Asia, held any positive movement in the markets at bay.
Traders were prevented from putting aggressive bets on the USD/JPY pair as a result of a mix of divergent dynamics as the monetary authority event risk approached.