USD/JPY flits with lows, just above 106.00 ahead of Abe’s press conference
- USD/JPY witnessed a dramatic intraday turnaround from the 107.00 mark on Friday.
- News that Japan's PM Shinzo Abe is stepping down prompted some aggressive selling.
- Powell’s overnight dovish comments undermined the USD and added to the weakness.
The USD/JPY pair dived around 85 pips from two-week tops set during the Asian session and refreshed daily lows, around the 106.10 region in the last hour.
The pair built on the previous day's solid intraday bounce of over 100 pips from weekly lows and gained some follow-through traction through the early part of the trading action on Friday. The bullish move was supported by the upbeat market mood, which tends to undermine demand for the safe-haven Japanese yen.
The USD/JPY pair, however, faced rejection near the 107.00 mark and witnessed a dramatic intraday turnaround on news that Japan's Prime Minister Shinzo Abe is stepping down due to ill health. The JPY strengthened across the board in reaction to the political development and dragged the pair back closer to the 106.00 mark.
On the other hand, the US dollar remained under some selling pressure in the wake of the Fed Chair Jerome Powell's dovish comments at the Jackson Hole Symposium on Thursday. Powell announced a major policy shift and said that the Fed is willing to allow inflation to run hotter than normal to support the labor market, suggesting that rates could remain lower for longer.
Meanwhile, the USD/JPY pair now seems to have entered a bearish consolidation phase as the market participants now look forward to Abe’s press conference at 08:00 GMT.
Later during the early North American session, traders will take cues from the US economic releases – the Core PCE Price Index and Michigan Consumer Sentiment Index. The data might influence the USD price dynamics and provide some trading impetus on the last day of the week.
Technical levels to watch