USD/JPY remains depressed below 133.00 amid quiet trading
27.12.2022, 06:28

USD/JPY remains depressed below 133.00 amid quiet trading

  • USD/JPY is treading listlessly amid a quiet start to the holiday-shortened week.
  • US Dollar drops with Treasury bond yields amid China-led risk-on mood.
  • USD/JPY bulls need acceptance above 133.00 to resume the recovery.

USD/JPY is trading on the defensive heading into the early European morning, as the Japanese yen traders take it easy after a volatile last week.  

The downbeat tone around the pair could be partly due to a broad-based US Dollar weakness, fuelled by persisting risk flows and lower US Treasury bond yields. Reports that China is planning to scrap the quarantine rules for inbound travelers alongside further relaxation of restrictions boosted risk sentiment, weighing negatively on the safe-haven US Dollar.

Light trading following the Christmas holiday weekend also left the USD/JPY pair gyrating in a narrow range below the 133.00 level so far. Markets refrain to place any fresh directional bets on the Japanese yen after the previous week’s surprise yield curve revision by the Bank of Japan (BoJ). The BoJ’s move caught markets off-guard and triggered a fresh sell-off in bonds and stocks globally before a ‘Santa rally’ kicked in the second of the week, helping calm market nerves.

The pair will take cues from risk trends for any moves, as the US data docket remains relatively light amid a holiday-shortened week.

From a short-term technical perspective, USD/JPY is failing to find acceptance above the 133.00 level, threatening recovery attempts.

A sustained move above the latter is needed to extend the corrective upside toward the 133.50 psychological mark.

However, the bearish 21-Daily Moving Average (DMA) cut the mildly bullish 200DMA from above, validating a bear cross on Friday.

The 14-day Relative Strength Index (RSI) is sitting just above the oversold territory, backing the bearish potential.

Friday’s low at 132.15 is the next downside target for sellers, below which the December 22 low at 131.64 could be retested.

USD/JPY: Daily chart

USD/JPY: Additional technical levels

 

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