Market Sentiments Favor the Pair

There was a mild positive bias in the trading of the USD/JPY pair during the first part of the European session, although it looked to have struggled to capitalize on the movement above the 115.00 psychological benchmarks.

USD/JPY price chart. Source TradingView

The pair was able to attract some buying on the first day of the week to set a good tone for the coming days. The pair was able to recover some of the heavy losses incurred on the final selling day of the past week to more than a week’s low while there is an extended bullish solid run of the US dollar. 

The escalating war between Russia and Ukraine, as well as sanctions imposed on Russia by some Western countries for prosecuting the war on Ukraine, has continued to put pressure on the sentiment of investors, and it is currently serving the interest of the US dollar as a safe-haven asset and a global reserve.

US Dollar Gains on Crisis

In a list of the most recent developments in Eastern Europe, the Russian military has intensified its campaign in Ukraine and all attempts to get a ceasefire agreement to aid the evacuation of civilians from the city of Mariupol, which is the center of intense fighting, failed. In fact, Russia’s President, Vladimir Putin, has warned that the ongoing war with Ukraine will continue if the country is not demilitarized.

That current situation, as well as the US jobs data that was released on Friday, combined to give the US dollar a massive boost to the highest point it has been since May 2020.

The US dollar got more support from an increase in the US Treasury bond yield. This was considered a decisive factor that further acted as an inspiration to bulls, and it was a tailwind to the gaining USD/JPY currency pair.

The Treasury bond uptick, however, did not have the required bullish conviction, which therefore called for some level of caution before staking funds for any meaningfully increased gain as there are no significant market-shaking economic data for Monday. 

Nonetheless, the USD/JPY trading pair currently seems to have broken two consecutive days of a losing streak, and it looks like it is in the care of the US dollar and the various price dynamics. The market’s focus will, therefore, be on the geopolitical events in Europe and North America as Russia and Ukraine head for a ceasefire talk in Belarus. Russia said it is willing to hold fire and allow humanitarian aid to get into Ukraine.