The USD/JPY pair is in focus once again, as it gains some follow-through traction on the first day of the new week. Despite the positive momentum, the spot prices have retreated a few pips from a three-day top and are currently trading around the 135.00 psychological mark during the early part of the European session.
The USD/JPY pair is one of the most traded currency pairs in the forex market. It is a measure of the exchange rate between the US dollar and the Japanese yen. The exchange rate is affected by a range of factors, including economic data, monetary policy decisions, and geopolitical events.
Lack of Follow-Through Buying
While the USD/JPY pair has gained some traction, it lacks follow-through buying. This means that there is a lack of strong momentum to push the pair higher. There are several reasons for this lack of follow-through buying.
Firstly, the market is cautious ahead of the release of key economic data. The US and Japan are scheduled to release their GDP figures this week. The GDP figures are a key indicator of the health of the economy and can have a significant impact on the currency pair.
Secondly, the US Federal Reserve’s monetary policy decision is also a key factor that can impact the USD/JPY pair. The Fed is expected to keep interest rates unchanged at its next meeting, but any changes in its policy statement could affect the currency pair.
Lastly, geopolitical tensions in the Asia-Pacific region could also impact the USD/JPY pair. The ongoing tensions between China and Taiwan, as well as the situation in North Korea, could cause volatility in the currency markets.
Future Movement of the USD/JPY Pair
The future movement of the USD/JPY pair will be determined by a range of factors. These factors include economic data, monetary policy decisions, and geopolitical events.
In terms of economic data, the GDP figures are likely to have a significant impact on the currency pair. If the US GDP figures come in better than expected, this could push the USD/JPY pair higher. Conversely, if the Japanese GDP figures come in better than expected, this could push the pair lower.
In terms of monetary policy decisions, the US Federal Reserve’s policy statement is likely to be closely watched by traders. Any changes in the Fed’s policy statement could cause volatility in the currency markets.
Geopolitical tensions in the Asia-Pacific region could also impact the USD/JPY pair. The ongoing tensions between China and Taiwan, as well as the situation in North Korea, could cause volatility in the currency markets.
Conclusion
In conclusion, the USD/JPY pair has gained some follow-through traction on the first day of the week, but it lacks follow-through buying. The market is cautious ahead of the release of key economic data and the US Federal Reserve’s monetary policy decision. Geopolitical tensions in the Asia-Pacific region could also cause volatility in the currency markets. As such, traders should remain cautious and keep an eye on these key factors when trading the USD/JPY pair.
