- USD/JPY retreats from 2-week high, still holds above 111.00.
- Yen falls amid risk aversion but manages to benefit versus US Dollar amid lower yields.
The USD/JPY pair retreated further from 2-week highs amid a US dollar sell-off following Fed’s Powell speech at Jackson Hole. Earlier rose to 111.48, the strongest level since August 6 and recently printed a fresh daily low at 111.10.
It was hovering near the lows, with the intraday bias pointing to the downside. The greenback lost momentum after being unable to break the 111.50 area and the dropped quickly on the back of Powell’s speech.
The Fed’s Chairman mentioned that inflation was not showing any signs of accelerating above the target and the economy presented no elevated risks of overheating. The tone was perceived as not so hawkish as his previous remarks. Gold jumped above $1200/oz while the US Dollar Index fell to 95.12, below yesterday’s low.
The yen rose versus the US dollar even as Wall Street rallied. The S&P 500 hit a new all-time high while the Dow Jones was up 0.60%. Risk aversion failed to lift USD/JPY probably affected by overall greenback weakness and a decline in US yields. The US 10-year dropped from 2.85% back to 2.82% after Powell’s words
USD/JPY Short-term Levels to watch
A recovery above 111.30 (20-hour moving average), could add momentum to the greenback for a test of the 111.50 area; above the next resistance might be seen at 111.75. On the flip side, below 111.10, support levels are located at 110.90 (horizontal and short-term uptrend line) and 110.55.
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