05 February 2024, USD/JPY
Event to watch out for today:
17:00 EET. USD - ISM Service Sector Business Activity Index
USDJPY:
The Japanese yen came under selling pressure for the second day in a row on Monday, sliding to a new low since the start of the year against its US counterpart during the Asian session. Despite the Bank of Japan's (BoJ) tightening earlier this month, the continuation of recent bullishness in global equity markets is seen as a key factor undermining the JPY's relative safe-haven status. Friday's impressive US jobs data released on Friday provided evidence that the economy is still in good shape, which should allow the Federal Reserve (Fed) to keep interest rates on hold for longer. This lifts the US Dollar (USD) to its highest level since 11 December and provides further support for the USD/JPY pair.
Yen bulls, meanwhile, seem unimpressed by the upward revision to Japan's service sector business activity index for January, although bets on an imminent BoJ policy change should help limit deeper losses. Continued concerns over further escalation of geopolitical tensions in the Middle East and China's economic woes could also serve as a tailwind for the yen in the longer term. Traders await the release of the US ISM Services PMI from ISM, which, along with US bond yields, will drive demand for the dollar. Risk sentiment should favour short-term trading opportunities for USD/JPY on the first day of the new week.
Trade recommendation: Trade buy orders from the current price level
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