USD/JPY remains grounded above 110.20 amid steady USD, risk aversion
- USD/JPY dips from the recent highs of 110.82 but remains elevated.
- US Dollar continues to scale higher post-FOMC and market uncertainties.
- Yen limits losses on its safe haven appeal despite BOJ no show.
USD/JPY continues to move in the upward direction, a trend set in the second week of June. After making a low at 107.47 in late April, the pair is rising steadily with YTD in focus.
At the time of writing, the USD/JPY pair is trading at 110.23, up 0.04% for the day.
The move is primarily sponsored by the appreciation of the US dollar. The greenback stands at 92.30, the levels last seen in April. The previous week counted as the best week in terms of gains for USD since March 2020.
The Fed surprised the market on Wednesday by raising the inflation forecast and two rate hikes in 2023. Investors rushed to the US dollar in the wake of higher interest rate expectations, while equities and commodities tumbled.
Meanwhile, the US 10-year benchmark yields edge lower at 1.44% with 0.48% losses. The fall in the long-dated bond yields limits the gains for USD/JPY.
On the other hand, the Japanese yen came under pressure after the Bank of Japan (BOJ) extended its pandemic-relief program till September, which is an extension of six months. The move reflects the problem in the pace of economic recovery as the country lags behind the developed nations in containing the COVID-19.
In the economic docket, investors will have the opportunity to react to the US Chicago Fed National Activity Index (May) and Fed’s William’s speech.
USD/JPY additional levels