- A combination of factors dragged USD/JPY lower for the second consecutive session.
- COVID-19 jitters benefitted the safe-haven JPY and exerted some pressure on the pair.
- Sliding US bond yields kept the USD bulls on the defensive and did little to lend support.
The USD/JPY pair continued losing ground through the first half of the European session and dropped to fresh weekly lows, around the 109.70 region in the last hour.
The pair added to the previous day's heavy losses and witnessed some follow-through selling for the second consecutive session on Thursday. Investors remain concerned about the spread of the highly contagious Delta variant of the coronavirus. Apart from this, softer Chinese GDP print further took its toll on the global risk sentiment, which benefitted the safe-haven Japanese yen and exerted some pressure on the USD/JPY pair.
Bearish traders further took cues from an extension of the overnight steep decline in the US Treasury bond yields, which kept the US dollar bulls on the defensive. Apart from this, Fed Chair Jerome Powell's dovish testimony on Wednesday was seen as another factor that acted as a headwind for the greenback. During the semi-annual congressional testimony, Powell reiterated that the spike in inflation was only temporary.
Powell's comments overshadowed a report, which showed that the US producer prices posted their biggest annual increase in nearly 11 years. This comes on the back of Tuesday's data that revealed that the US consumer inflation jumped to the highest level in more than 13 years in June. The incoming macro data pointed to rising inflationary pressures, though failed to convince investors that the Fed will tighten its policy sooner than anticipated.
Market participants now look forward to the US economic docket, featuring the releases of the usual Initial Weekly Jobless Claims and Philly Fed Manufacturing Index. This, along with the US bond yields, will influence the USD price dynamics later during the early North American session. Apart from this, the broader market risk sentiment and Powell's second day of congressional testimony should provide a fresh impetus to the USD/JPY pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
GBP/USD extends recovery above 1.2500, awaits US GDP data
GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter.
Gold price edges higher amid weaker USD and softer risk tone, focus remains on US GDP
Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.