September 25, 2023

USD/JPY Maintain Gains Over Mid-115.00 Level, Focuses on Russia-Ukraine Negotiations

The USD/JPY trading pair managed to stick with its bids throughout the middle of the European session, and it was eventually seen trading closing to 115.75 to 115.80 zones, or alternatively, you can call it a two-week and a half high.

USD/JPY price chart. Source TradingView

The combined support from various factors aided the pair to consolidate on gains from the previous day’s solid movement upward and for it to get some follow-up tractions for the second day in a row. The worldwide struggle for conservative safe-haven assets in fiat currencies and precious metals that greeted the Russia-Ukraine war as it began last week looks to have subsided as there are signs of an early ceasefire with the ongoing talks in Belarus.

A Ukrainian Presidential Adviser mentioned that a delegation has headed for another round of dialogue with Russia, which is expected to be more fruitful. Consequently, it added some weight to the Japanese yen and became a tailwind for the currency in the midst of a relatively strong US dollar.

Appearance Before Congress

The Chairman of the US Federal Reserve, Jerome Powell, said to Congress as his testimony before the parliament began that the US apex bank might resort to stricter measures in the event of the stubborn inflation not reducing in its current level.

As a corroboration, Chicago’s Federal Reserve President, Charles Evans, added that the expected monetary policy is already beginning on the wrong footing, and it needs to be reviewed upwardly towards a neutral position. 

This inflationary factor, as well as the deteriorating military condition in Ukraine, served the interest of the US dollar as a safe-haven asset currently sought globally, and it gives a further boost to the USD/JPY pair as an economic force.

Bonds Still Play Their Part

That said, the recent calm tones surrounding the US Treasury bond yields helped to hold back US dollar bullish investors from staking too aggressive wagers, and it also put a lid on further runaway rallies for the USD/JPY trading pair, at least in the meantime while things wait to return to normal. 

A lot of market players are presently watching out for the weekly US Initial Jobless Claims report expected by the weekend. Aside from that, traders are expected to take a close cue from the Federal Reserve Chair Jerome Powell’s second appearance before Congress so they can have directions for some near-term move. The primary attention will, however, be on events around the conflict between Russia and Ukraine as it plays a vital role in the trading pair.   

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