USD/JPY Pair Edges Lower for Two Consecutive Sessions

NEW YORK, N.Y. – The USD/JPY pair remained depressed on the trading session on Wednesday, just below the mid-109.00 levels.

The USD/JPY pair edges lower, marking declines for two consecutive sessions on Wednesday following the prevailing cautious mood of market players benefiting the safe-haven status of the Japanese yen, causing the dollar to drop for the day. The downside for the US dollar during the day remains largely due to the shifting focus of investors to the BOJ decision.

Despite remaining in the trading range it is familiar with, at around the 109.00 levels, the USD/JPY pair has stayed on the defensive for a second straight session. The pair has stayed capping under the region between 109.70 and 109.75, with the multi-month highs set earlier this month.

On Tuesday, the pair inched lower over the cautious mood in the market, modestly boosting the safe-haven status of the JPY against the dollar.

The recent optimism in the market was largely focused on the developments on the trade deal between the US and China – two of the largest economies in the world. However, the revived risk that Brexit will be a no-deal despite the Conservatives party winning the UK general election has kept a tight lid in the increasing optimism of market players.

Furthermore, traders also took cues from the recent modest declines in the bond yields in the US Treasury, although it missed a strong conviction.

The downside is the market’s sentiments stayed muffled on the back of several follow-through pickups of the demand of the America currency. However, the dollar continued to take support from the comments from President Robert Kaplan of the Dallas Fed, which stated that the interest rates will stay within range unless there will be forceful changes in the outlook for the economy in the US.

Such downsides, partnered with the recent release of the Japanese export data showing disappointing results, has further limited the downside. The report showed a decline in the export numbers by around 7.9% year-on-year in November, marking the country’s consecutive declines for 12 months. The disappointing data has sabotaged the domestic currency’s demand.

With the recent optimism in the market starting to wane, traders are looking towards more market cues. But, there isn’t any major economic data from the US that are scheduled for release on Wednesday that could help increase the market’s volatility. Hence, the price dynamics for the US dollar, as well as the broader risk sentiments in the market, are expected to stay as the major determinants for the momentum of the USD/JPY pair ahead of the policy decision of the BOJ, which is scheduled for Thursday.