Introduction
The USD/JPY pair has been on the defensive for the second consecutive day, trading just above a one-week low touched the previous day. During the early European session, the pair trades around 133.50, down over 0.10% for the day. The pair’s movements are influenced by a combination of diverging forces that are creating uncertainty in the forex market. In this article, we will analyze the factors influencing the USD/JPY pair and provide insights into its near-term outlook.
USD/JPY pair trades lower for the second consecutive day
The USD/JPY pair is trading lower for the second consecutive day, reflecting a stronger Japanese yen against the US dollar. The yen has been strengthening against the dollar due to the rise in demand for safe-haven assets amid the resurgence of the COVID-19 pandemic. Moreover, the recent comments from the Bank of Japan (BOJ) Governor Haruhiko Kuroda have also provided support to the yen. Kuroda stated that the central bank would not hesitate to take additional easing measures if necessary, which has boosted the yen’s safe-haven appeal.
Diverging forces influencing the USD/JPY pair
The USD/JPY pair is also being influenced by diverging forces that are creating uncertainty in the forex market. On the one hand, the US dollar is under pressure due to the rising US inflation concerns and the Federal Reserve’s dovish stance. The Federal Reserve has reiterated that it would maintain its accommodative policy stance for a longer period, which has weighed on the dollar’s performance. On the other hand, the Japanese yen is strengthening due to the BOJ’s dovish stance, which has increased the demand for safe-haven assets.
Near-term outlook for the USD/JPY pair
The near-term outlook for the USD/JPY pair remains uncertain due to the diverging forces influencing its performance. However, some analysts believe that the yen’s safe-haven appeal will continue to support its strength against the dollar. Moreover, the rising concerns over the US inflation and the Fed’s dovish stance are expected to keep the dollar under pressure. Therefore, the USD/JPY pair is likely to remain under pressure in the near term, with the yen continuing to strengthen against the dollar.
Conclusion
The USD/JPY pair remains under pressure, trading just above a one-week low touched the previous day. The pair’s movements are influenced by a combination of diverging forces that are creating uncertainty in the forex market. The yen’s safe-haven appeal, the rising US inflation concerns, the Fed’s dovish stance, and the BOJ’s dovish stance are the key factors influencing the pair’s performance. The near-term outlook for the USD/JPY pair remains uncertain, with the yen expected to continue its strength against the dollar.
