USD/JPY:Trading participants appear hesitant to make big bearish
Trading in USD/JPY is restricted to a small range as investors eagerly anticipate the FOMC decision.
Throughout the early portion of Wednesday's European session, the USD/JPY pair struggles to generate any noticeable momentum and swings between tepid gains and modest losses. As traders look hesitant and anxiously await the results of a two-day FOMC monetary policy meeting, spot prices linger below the mid-130.00s. On Monday, the USD/JPY pair experiences some intraday selling at the 130.30 region and declines by more than 100 pip from the day's peak. However, spot prices are still firmly inside a trading range that dates back a week and have now appeared to have stabilized above the mid-129.00s during the early European session.
Fresh concern that high inflation may prompt a more hawkish posture from the Bank of Japan later this year is continuing to bolster the Japanese Yen (JPY). In addition, a generally negative outlook for the equities markets supports the safe-haven JPY. The USD/JPY pair has some downward pressure as a result, which adds to the overall adverse sentiment around the US Dollar and the intraday decline.
In fact, as expectations for a less aggressive Fed policy tightening increase, the USD Index, which measures the value of the dollar against a basket of currencies, is currently hovering close to a multi-month low.
The markets appear to be confident that the US central bank would moderate its aggressive approach and announce a lower 25 bps rate hike on Wednesday at the conclusion of a two-day meeting. This impacts on the USD and keeps US Treasury bond yields low.
Trading participants appear hesitant to make big bearish wagers on the USD/JPY pair as the significant central bank event risk approaches. In addition, remarks made by BoJ Governor Kuroda Haruhiko, who stated that the bank must maintain its loose monetary policy and 2% inflation objective, limit the JPY's upward potential. This calls for more care before positioning for any appreciable significant fall, at least initially.
Throughout the early portion of Wednesday's European session, the USD/JPY pair struggles to generate any noticeable momentum and swings between tepid gains and modest losses. As traders look hesitant and anxiously await the results of a two-day FOMC monetary policy meeting, spot prices linger below the mid-130.00s. On Monday, the USD/JPY pair experiences some intraday selling at the 130.30 region and declines by more than 100 pip from the day's peak. However, spot prices are still firmly inside a trading range that dates back a week and have now appeared to have stabilized above the mid-129.00s during the early European session.
Fresh concern that high inflation may prompt a more hawkish posture from the Bank of Japan later this year is continuing to bolster the Japanese Yen (JPY). In addition, a generally negative outlook for the equities markets supports the safe-haven JPY. The USD/JPY pair has some downward pressure as a result, which adds to the overall adverse sentiment around the US Dollar and the intraday decline.
In fact, as expectations for a less aggressive Fed policy tightening increase, the USD Index, which measures the value of the dollar against a basket of currencies, is currently hovering close to a multi-month low.
The markets appear to be confident that the US central bank would moderate its aggressive approach and announce a lower 25 bps rate hike on Wednesday at the conclusion of a two-day meeting. This impacts on the USD and keeps US Treasury bond yields low.
Trading participants appear hesitant to make big bearish wagers on the USD/JPY pair as the significant central bank event risk approaches. In addition, remarks made by BoJ Governor Kuroda Haruhiko, who stated that the bank must maintain its loose monetary policy and 2% inflation objective, limit the JPY's upward potential. This calls for more care before positioning for any appreciable significant fall, at least initially.
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