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  • USD/JPY ignores trade optimism amid US dollar supply.  
  • Yen gains despite upbeat US outlook amid steeper US yield curve.  
  • The spot to remain subdued amid Japanese holidays, New Year Eve trades

USD/JPY is holding the lower ground around 108.70 in Europe, having hit three-week lows at 108.61 in Asia amid broad US dollar weakness and falling global equities.

The year-end profit-taking spree downed the global equities and lifted the bids for the safe-haven yen this Tuesday, knocking-off USD/JPY nearly 100-pips lower over the past three trading days.

Moreover, rising US-China trade deal signing hopes continued to weigh negatively on the US dollar when compared to its six major rivals, keeping the pair under pressure.

Meanwhile, the steepening of the US Treasury yield curve also failed to budge the yen buyers. A steeper US yield curve usually paints an improved US economic outlook next year.

“The curve, as represented by the spread between the 10- and two-year yield yields, rose to 32 basis points on Monday to hit the highest level since October 2018. The spread had turned negative (inverted yield curve) in August, triggering recession fears,” as explained by FXStreet’s analyst, Omkar Godbole.

In the day ahead, the major will remain at the mercy of the USD price-action amid incoming US-China trade developments and impact on the broader market sentiment. Also, of note remains the US CB Consumer Confidence data for near-term trading opportunities, with slowing volumes likely to extend.

  • China’s ForeignMin makes no comment on Liu He’s visit to Washington this week

USD/JPY Technical levels to consider