USD/JPY drops to one-week low, eyeing 115.00 mark amid reviving safe-haven demand By HareshMenghani USDJPY Bonds RiskAppetite Fed Currencies
The prevalent cautious mood benefitted the safe-haven JPY and exerted some downward pressure.Thedropped to a one-week low during the mid-European session, with bears now eyeing a move to challenge the key 115.00 psychological mark.
The pair struggled to capitalize on its intraday move up, instead met with a fresh supply near the 115.85 region and turned lower for the fourth successive day on Monday. The downfall dragged the USD/JPY pair further away from a five-year high touched last week and was sponsored by reviving demand for the safe-haven Japanese yen.
The US Treasury bond yields prolonged their recent strong move up amid growing acceptance for an eventual Fed lift-off in March 2022. The market bets were reaffirmed by Friday's release of the US jobs report, which highlighted a tight labour market and pushed the yield on the benchmark 10-year US government bond to a two-year high.
An extended sell-off in the US bond markets weighed on investors' sentiment, which was evident from a cautious mood around the equity markets. This, in turn, forced investors to take refuge in traditional safe-haven currencies, including the JPY, which was seen as a key factor that exerted some downward pressure on the USD/JPY pair.
Meanwhile, the downtick seemed rather unaffected by a strong pickup in the US dollar demand, bolstered by elevated US bond yields. It, however, remains to be seen if the ongoing corrective pullback marks the end of a one-month-old up-trend or attract fresh buying at lower levels amid absent relevant market-moving macro data from the US.Chair Jerome Powell's testimony on Tuesday.
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