The USDJPY pair is down 0.2%, taking out the 110.00 level falling from a high of 110.11 and testing a low of 109.85. Last Friday, the USDJPY pair initially soared from 110.00 to 110.34 before falling to 110.04 as the bulls ran out of steam due to a risk-off turn on Wall Street.
The US dollar index, which measures the greenback against a basket of six currencies, was ending 0.16% higher at 92.712.
US Retail Sales unexpectedly climbed in June as demand for goods remained robust. Solid data and a shift in interest rate expectations after the Federal Reserve flagged in June sooner-than-expected hikes in 2023 have contributed to the strength in the greenback in recent weeks.
However, the bears are out in force, targeting the prior lows in the 109.70s, potentially due to mixed messages from Fed members as well as the weekend covid headlines. For instance, while Fed Chair Jerome Powell was reiterating on Thursday that rising inflation was likely to be temporary, other members, such as James Bullard, are calling for immediate tapering.
The COVID-19 spread is weighing on market’s risk appetite.
The Dow Jones Industrial Average slid 0.9% to 34,687.85 and the Nasdaq Composite dropped 0.8% to 14,427.24. The S&P fell 0.75% to 4327.16, closing near the lows but losing just 1% this week.
The yen, which has been the only currency with the Kiwi dollar able to overtake the dollar last week. Therefore, US Treasury dynamics should remain the main mover for the yen.
Bulls will want to see an upgrade in risk sentiment that could prompt some Yen weakness, but for the time being, the focus is on the downside.
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