Title : USD/JPY struggles for direction, remains confined in a range around 136.00 mark

July 07, 2022 02:59 AM ET

By : AnalysisWatch

The USD/JPY oscillated between tepid gains and minor losses and remained confined to a narrow band around the 136.00 mark during the early European session.

On Thursday, intraday selling around USD/JPY was triggered by news that the Bank of Japan will raise its 2022 inflation forecast above 2%.The initial downside was quickly bought back near the 135.55 region after the BOJ reiterated that it is fully committed to the current ultra-loose monetary policy stance.

Conversely, the minutes of the June 14–15 FOMC meeting, released on Wednesday, reaffirmed market bets for more aggressive rate hikes by the US central bank. Indeed, policymakers emphasized the importance of fighting inflation, even if it meant a slowdown in the economy, and indicated that another rate hike of 50 or 75 basis points was likely at the July meeting.

Nevertheless, the fundamental backdrop supports the prospects of a further near-term appreciation move for USD/JPY. Market participants are now looking at weekly US jobless claims for fresh impetus. Traders will also keep an eye on speeches from Fed Governor Christopher Waller and St. Louis Fed President James Bullard.

Aside from this, broader risk sentiment should allow traders to take advantage of short-term opportunities around USD/JPY. However, the focus will be on the US monthly employment report, popularly known as NFP, due for release on Friday, which will play a key role in influencing near-term USD price dynamics