The currency pair experienced a pullback during Thursday’s Asian trading session as market participants weighed the prospects of a hawkish turn in the Bank of Japan’s (BoJ) policy against a backdrop of uncertainty regarding future Federal Reserve rate hikes. Despite a brief recovery from its monthly low on Tuesday, the pair failed to surpass the previous night’s high due to these speculations.
On Wednesday, the Japanese Yen initially weakened, reaching 149.75 against the US Dollar. However, it managed to regain some ground on Thursday. This recovery came despite strong US labor market data and minutes from the Federal Reserve that suggested a hawkish stance, both of which had previously bolstered the US Dollar.
Contributing to the complex market sentiment were rising inflation expectations for November, which hit their highest level since April, and a significant decrease in US Durable Goods Orders. These factors introduced uncertainty about the Dollar’s trajectory.
Moreover, trading volumes were affected by the US Thanksgiving holiday, which typically leads to reduced market activity. Technical analysts have been closely monitoring key Fibonacci retracement levels that may serve as potential support and resistance points for the USD/JPY exchange rate movements.
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