Search ForexCrunch
  • The USD remains well supported by tempered Fed rate cut expectations.
  • Investors refrain from placing aggressive bets ahead of Powell’s testimony.
  • Sustained move beyond 50-DMA needed to confirm near-term bullish bias.

The USD/JPY pair refreshed multi-week tops during the Asian session on Wednesday, albeit struggled to extend the momentum beyond the 109.00 handle.

Following last week’s upbeat headline NFP print for June, diminishing odds for a 50bps point rate cut by the Fed led to a solid rebound in the US Treasury bond yields and turned out to be one of the key factors behind the recent US Dollar rally to near three-week tops.  

The pair built on its recent recovery move from multi-month lows and climbed to its highest level since May 31, though a combination of negative forces held investors from placing any aggressive bets and kept a lid on any strong follow-through beyond 50-day SMA.  

The prevalent cautions mood, as depicted by a subdued action in equity markets, extended some support to the Japanese Yen’s safe-haven status and seemed to cap gains ahead of the Fed Chair Jerome Powell’s two-day congressional testimony, starting this Wednesday.

Powell’s comments, followed by the release of the June FOMC meeting minutes will be closely scrutinized for clues about the central bank’s monetary policy outlook and the next move at the upcoming meeting on July 30-31, which should provide a fresh directional impetus.

Technical levels to watch