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Yen losses against the USD for the fourth consecutive session

August 5, 2022 18:15:34

The Japanese Yen once again lost against the USD to gain some follow-through traction as the demand for the safe-haven asset rises amid U.S-Sino tensions and global economic outlook. The Yen had suffered major losses in the first half of 2022 but traded with a firmer footing recently.

The divergent monetary policy between U.S and Japan weighed on the latter currency. The Bank of Japan’s ultra-easy monetary policy in order to support the economic recovery left the major behind other G-10 currencies as other central banks are racing ahead to hike interest rates.

However, recently several Japanese policymakers said an exit strategy is needed from its massive stimulus. This might be hinted at a probable shift in the central bank’s monetary policy stance.

The US dollar index jumped above 106.00 following stronger-than-expected U.S Non-farm payroll data. The higher data reaffirmed that the Federal Reserve will remain aggressive in the coming month to tame inflation.

The U.S economy added 528K jobs in July as compared to the market expectation of 250K.  Above the upwardly revised 398K in June. The unemployment rate fell to 3.5% in July as compared to 3.6% in June.

The benchmark U.S 10-year Treasury yields surged 2.8% following the fresh job data surprised the market. This fuels the demand for the greenback on the back of strengthening bets that the Fed will continue its aggrieve rate hike momentum in coming meetings.

As of press time, USD/JPY reads at $135.08, up 1.68% for the day.

USD/JPY reclaims the 135.00 mark

The price found reliable support near the 0.38% Fibo. Retracement level. Further, the formation of a hammer candlestick near the lows of 130.38 on August 1 entice fresh buying momentum in the pair.

However, the price remains pressured below the critical 21-day EMA at 135.15. A successful breach of the mentioned level would bring more gains on the spot.

On moving higher, the first upside target could be found at the high of July 27 at 136.67 followed by the 138.0 horizontal resistance level.

The MACD holds above the midline but with the receding bearish momentum. Any downtick in the indicator could hamper the bullish biasness.

The price could reverse to the $134.0 mark on the lower side. Next, the sellers would attempt to test the $132.0 horizontal support level.

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