USDJPY climbs to one-week high, eyes 141.00 mark amid modest USD strength
- USDJPY scales higher for the fourth straight day and climbs to a one-week high on Monday.
- Some follow-through USD buying remains supportive amid the Fed-BoJ policy divergence.
- A sustained move beyond the 141.00 mark is needed to support prospects for further gains.
The USDJPY pair gains some positive traction for the fourth straight day on Monday and climbs to a one-week high during the early European session. The pair is currently placed just below the 141.00 mark, with bulls still awaiting a sustained move back above the 100-day SMA support breakpoint.
The US Dollar builds on its recovery from the lowest level since August 12 - touched in the aftermath of softer US consumer inflation figures last week - and acts as a tailwind for the USDJPY pair. The better-than-expected US Retail Sales data released on Thursday cast doubts on the peak inflation narrative. Adding to this, hawkish signals from several Fed officials suggest that the US central bank is still far from pausing its policy-tightening cycle. This is seen as a key factor that continues to lend some support to the greenback.
The Japanese Yen, on the other hand, is undermined by a more dovish stance adopted by the Bank of Japan (BoJ). In fact, BoJ Governor Haruhiko Kuroda reiterated on Friday that the central bank will stick to its monetary easing to support the economy and achieve the 2% inflation target in a sustained, stable fashion. This is seen as another factor pushing the USDJPY pair higher. That said, a softer risk tone helps limit deeper losses for the safe-haven JPY and might keep a lid on any meaningful upside for the major, at least for the time being.
The market sentiment remains fragile amid concerns about economic headwinds stemming from the worsening COVID-19 situation in China and the imposition of fresh lockdowns in several financial hubs. Adding to this, fears of a potential escalation in the Russia-Ukraine conflict temper investors' appetite for riskier assets. Even from a technical perspective, the recent repeated failures near the 141.00 support breakpoint warrant some caution for aggressive bullish traders and positioning for any further near-term appreciating move for the USDJPY pair.
Technical levels to watch