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Title: USD/JPY retreats from daily high, still well bid above 149.00 mark

Oct 24, 2022 3:21 AM ET


USD/JPY attracts aggressive buying near the 145.45 region and is up more than 425 pips from the near two-week low it touched on Monday.

However, spot prices retreated a few pips from the daily high, although they managed to hold above the 149.00 mark during the early European session.

The Nikkei newspaper reported over the weekend that the Japanese government and the Bank of Japan had intervened in the currency market on Friday.

This was cited as a key factor behind the drop in USD/JPY during Monday's Asian session, dragging spot prices away from the highest level since August 1990, set on Friday.

Japanese officials, however, declined to comment on the matter, which, along with the emergence of fresh dollar buying, helped the USD/JPY pair reverse an intraday decline.

Moreover, signs of stability in financial markets undermine the JPY safe haven and offer additional support to the pair, although momentum stalled near the 149.70 area.

However, the Fed is expected to continue tightening monetary policy to curb inflation. The Bank of Japan, meanwhile, remains committed to its ultra-loose policy, which is a significant divergence from the hawkish stance adopted by other major central banks. This could continue to weigh on the yen and help limit the decline in USD/JPY.

Market participants are now awaiting the US economic docket, which will see the release of PMI data for the month of October. This, along with US bond yields, will influence the dynamics of the dollar price and provide some impetus to the USD/JPY pair. On the other hand, traders will be guided by overall risk sentiment to take advantage of short-term opportunities.

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