Dollar, Yen Recovers to Prior Zones, BoJ Policy Meeting, US Inflation Eyed

The dollar is recovering slowly with the yen, and commodity currencies are the weakest. However, key pairs and crosses are mostly contained around Friday’s level. Breakthrough is also a long way off. The key emphasis in terms of technical analysis will be on if moves in the Dollar and Yen indicate a near-term bearish turnaround.

With a very low economic calendar and no major releases scheduled for today, trading could remain weak. However, with three central banks being highlighted this week and a lot of data to be included, volatility is expected. On the first day of a new trading week, the US dollar was back in demand amid hopes that the Federal Reserve may tighten its monetary policy sooner rather than later. As a result, the USD/JPY pair was perceived as receiving some support as a result of this.

During the session, the USD/JPY pair recovered from a sub-110.00 low and moved back closer to daily highs, albeit without much follow-through buying. The pair was last seen trading around the 110.30-35 range, with minor intraday gains. Concerns about the highly contagious Delta strain of the coronavirus, on the other hand, weighed heavily on investors’ moods. This was clear in the pervasive risk-off mood, which supported the safe-haven Japanese yen and kept the USD/JPY pair from rising further.

BoJ Policy Meeting and US Inflation Eyed

The Bank of Japan (BOJ) is expected to acquire ‘green bonds’ ahead of its policy-setting meeting on July 15-16, according to press reports on Monday. The majority of Japanese media outlets indicate that the BOJ’s green bond purchases will be part of currency management efforts.

On Monday, the US dollar began to recover after falling on Friday as Treasury yields stabilized. Fears regarding the Delta covid variety are weighing on people’s minds. Consumer data from the United States and Fed Chairman Powell’s testimony later this week are both being closely watched.

After a tumultuous week in which the link between US debt returns and the dollar weakened, US 10-year Treasury yields have stabilized around 1.35 percent on Monday. Yields are still on the down, while the dollar is gaining momentum after receding on Friday.