USD/JPY recovers modestly after retreating toward 103.50

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  • USD/JPY edged lower in the early American session.
  • US Dollar Index stays in the negative territory near 90.20.
  • Wall Street’s main indexes trade little changed on Tuesday.

The broad-based selling pressure surrounding the greenback in the early American session caused the USD/JPY pair to slide to a daily low of 103.56. Nevertheless, the pair didn’t have a difficult time staging a rebound and was last seen posting small daily losses at 103.67.

DXY looks to close the day in the red

Wall Street’s main indexes started in the positive territory and the S&P 500 Index touched a new all-time high of 3,870 after the opening bell. The risk-positive market environment triggered a USD selloff and dragged the US Dollar Index (DXY) to a session low of 90.11. As of writing, the DXY was consolidating its daily losses near 90.20, where it was down 0.2% on the day. 

Meanwhile, the data from the US showed that the Conference Board’s Consumer Confidence Index rose slightly to 89.3 in January from 87.1 in December. Ahead of the FOMC’s January meeting, however, the market reaction to this data was largely muted. 

Market participants don’t expect the Fed to announce any changes to its policy but any hints regarding possible changes to the amount and duration of asset purchases could ramp up the volatility.

Fed Preview: Fearing market froth or boosting Biden’s stimulus? Three scenarios.

During the Asian trading hours on Wednesday, the Coincident Index and the Leading Economic Index for November will be featured in the Japanese economic docket.

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