USD/JPY Drops Off Two-Week Uptrend, Now In The 114.15-20 Range

When it came to capitalizing on its Asian session surge to more than two-week highs, the USD/JPY pair faltered and was last seen moving in the neutral zone, around the 114.15-20 range.

This morning’s trading action continued to build on the previous day’s bullish movement away from the 113.75 level, which saw the pair gain some more traction throughout the early portion of the session. Although bullish traders attempted to place bold bets on the USD/JPY exchange, a confluence of variables prevented them from doing so, thus putting a cap on any major rise for the pair for the time being.

In line with the general cautious mindset, which can be seen in the weaker tone surrounding the equities markets, the relatively secure Japanese Yen has benefited, while the USD/JPY pair has suffered as a result. Furthermore, falling US Treasury bond rates have contributed to limiting gains, albeit the strong optimistic attitude around the US currency has provided some support.

Outline Of The Fundamentals

The Dollar remained solid at 16-month highs reached in the previous session, despite growing anticipation of a Federal Reserve policy increase shortly. On the contrary, the Fed funds futures imply a high chance that another increase will occur by November of next year, and the markets have already begun pricing in the prospect that the Fed could raise rates in July of 2022.

The underlying environment appears to be tilting in favor of optimistic traders. While there hasn’t been any significant follow-through purchasing, the lack of any such activity deserves some vigilance before preparing for any additional appreciation. Market players are now looking forward to the release of the monthly Retail Sales data from the United States, which will be released later during the early North American session.

This, in conjunction with the rates on US Treasury bonds, will have an impact on the USD’s macroeconomic factors. Aside from that, the general risk attitude in the market may also contribute to the creation of certain short-term trading chances in the USD/JPY pair.

Review Of The Technical Details

USD/JPY CHART Source: Tradingview.com

The price had rebounded 16 pips in a blink but has come to a halt on the first line of barrier at the peak of 114.31. Bulls will push in on the early November peaks at 114.44, which will defend a run straight to the 2021 peaks at 114.70 if there is a breach in the market. Bulls must commit at this point, or else the daily trendline barrier and Friday’s starting level at 114.06 will come under renewed attack.

Despite reaching nearly two-week highs throughout the Asian session, the USD/JPY pair was last seen moving in the central spot, in the vicinity of the 114.15-20 range, at the close of trade. Following up on the previous day’s good rise from the 113.75 level, the pair gained some further traction throughout the early portion of Tuesday’s trading action, which continued into the afternoon.

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