USDJPY pares recent losses as markets slip into month-end consolidation mode

Cautious optimism prevails during early Monday as traders brace for this week’s key inflation gauges from the US and Europe amid hopes of overcoming the bank fallouts. The firmer sentiment allowed the AUDUSD and USDJPY pair to recover while also underpinning the rebound in the US Dollar and Treasury bond yields. It’s worth noting that the Yen pair prints the daily gains after a consecutive four-week downtrend.

The US Dollar’s corrective bounce weighed on the price of Gold but the Crude Oil extends the previous weekly rebound amid sluggish markets. The same allowed the USDCAD to resist respecting the greenback’s strength.

Further, EURUSD stays pressured but GBPUSD grinds higher amid hopes of more measures from the UK government to avoid recession woes.

Elsewhere, BTCUSD and ETHUSD struggle to pare the previous weekly pullback amid looming fears of combined actions from major nations to regulate the crypto front.

Following are the latest moves of the key assets:

• Brent oil prints mild gains around $75.50 while challenging two-day downtrend at the latest.
• Gold drops for the second consecutive day to $1,971, down 0.30% intraday as we write.
• USD Index prints three-day winning streak around 103.20 by the press time.
• Wall Street closed with mild gains but equities in the Asia-Pacific region trade mixed. However, shares in Europe and the UK post minor gains.
• BTCUSD and ETHUSD struggle to lure buyers around $27,800 and $1,752 respectively.

Month-end positioning it is…

The Silicon Valley Bank (SVB) deal joins the easing hawkish bias of the major central banks to underpin the mildly positive risk profile on Monday. However, fears of growth and Russia’s shifting of nuclear weapons to Belarus keep risk-takers on their toes.

On the other hand, a light calendar and Friday’s mixed closing allowed traders to position themselves for the month-end moves after the last few volatile weeks.

It should be observed that the policymakers try to push back the banking fears and show readiness for more rate hikes but the markets seem less convinced amid recently mixed data. On the contrary, Fed’s Kashkari raised fears of the US recession and joined a recovery in the yields to allow the US Dollar to lick its wounds.

Apart from the USD’s bounce, fears surrounding China also weigh on Gold prices but crude oil stays firmer amid hopes of more output cuts.

While the FX and commodities were mostly boring, chatters that the Group of Seven (G7) nations brace for combined crypto regulations seem to have probed the BTCUSD and ETHUSD bulls.

• Strong buy: USDJPY
• Strong sell: ETHUSD, GBPUSD
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Nothing major apart from BoE’s Bailey

Monday’s economic calendar appears mostly light but the GBPUSD pair traders may have an interesting day as Bank of England (BoE) Governor Andrew Bailey is up for a speech. Also highlighting the Cable are the talks that UK PM Sunak will announce more measures to please British oil firms. Above all, Friday’s US Core PCE Price Index, the Fed’s favorite inflation gauge, becomes crucial for clear directions.

May the trading luck be with you!