USD/JPY Mixed as Markets Digest News Around Ukraine

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USD/JPY - H4

The Japanese Yen benefited more than the US Dollar from a late-Friday risk-off wave due to fresh fears of escalation in Ukraine and the pair had ended that day lower, but the week was profitable. The current one begun in a better mood and at the start of today's European session, we see some optimism around Ukraine, helping the pair rebound form earlier losses.

The situation however is volatile, and caution is needed, as markets react to flurry of news and reports. The united states have repeatedly warned of imminent Russian invasion, while US secretary of State Anthony Blinken announced on Monday the relocation of the US Embassy in Ukraine "due to the dramatic acceleration in the buildup of Russian forces" [1]. German Chancellor Olaf Scholz is expected to meet Russian President Putin to discuss the situation.

Other than that, Japan's annualized Q4 GDP registered a solid expansion of 5.4% in the fourth quarter of 2021, while Fed's Mr Bullard (hawk and voter), commented that "I do think we need to front-load more of our planned removal of accommodation than we would have previously. We've been surprised to the upside on inflation. This is a lot of inflation", speaking on CNBC yesterday. [2]

Technicals seem to be in the background for now, although not much has changed from our last analysis. USD/JPY covers earlier losses and keeps January's multi-year highs in sight (116.35), but sustained improvement is sentiment will be required for an advance beyond that level.

The US Dollar had failed to take out this level last week, while markets remain on edge. As such, it is still exposed the key 115.05-114.85 area that had contained Friday's slump, but a breach could open the door towards 114.14.

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Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 15 Feb 2022 https://www.state.gov/operations-at-u-s-embassy-kyiv/

2

Retrieved 01 Jul 2022 https://www.youtube.com/watch

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